Supreme Court asks RBI to submit list of large loan defaulters

Expressing serious concerns over the rise in bad loans, the Supreme Court (SC) on Tuesday asked the Reserve Bank of India (RBI) to submit a list of big loan defaulters who owe more than Rs 500 crore.

The court has given the central bank eight weeks to submit the information in a sealed cover.

The direction was issued by a bench which was hearing a public interest litigation against Housing and Urban Development Corporation (Hudco). 

The bench, headed by Chief Justice TS Thakur, expressed concern over the mounting bad debts of the banking system, pointing out at the irregularities in sanctioning huge loans to wilful defaulters in some cases.

Wilful defaults are pegged around Rs 3.75 lakh crore. According to bankers, that is three-fourth of the gross non-performing assets (NPAs). This is the list that bankers submit to RBI.

Senior bankers say that gross NPAs are classified under various heads like siphoning off funds, changing the end-use, round-tripping and bloating up assets. Banks exclude natural calamities and such genuine stress from the list. However, RBI has so far not given an official figure on wilful defaults of the banking sector.

To declare accounts or borrowers 'wilful defaulters', banks have to follow certain procedures like they would have to follow while initiating recovery procedures.

Meanwhile, leading corporate lawyers say that the whole issue may continue to be shrouded in secrecy as the information is sought by the apex court in a sealed cover.

While banks shield large borrowers by citing client confidentiality, retail borrowers of home, car and personal loans are put to shame by publishing their pictures in newspapers.

Rarely do banks put up names of large corporate borrowers even when loans taken by them are several times bigger.