Tuesday, 25 October 2016

57 Borrowers Owe Banks Whopping Rs. 85,000 Crore, Supreme Court Told

Whether names of those who have defaulted on massive bank loans should be made public will be decided by the Supreme Court this week. On Monday, the court raised the question as it examined a list of 57 borrowers who have not returned loans worth a staggering Rs. 85,000 crore. "Who are these people who have borrowed money and are not paying back? Why can't their names be made public?"
asked a bench headed by Chief Justice TS Thakur. The Reserve Bank of India, which submitted the list earlier this year, opposed the suggestion, saying not all have defaulted willfully. The central bank also argued that it was "extremely necessary" to keep the names confidential because of the relationship of trust between banks and clients.

"The RBI is working in the interest of banks and names of defaulters cannot be made public as per the statute," said the central bank.

To this, the court said, "You (RBI) must work in the interest of the country, not just in the interest of banks."

The case will be heard next on Friday, when the court will decide whether to make defaulters' names public.

The RBI's list has names of those who have defaulted on loans of Rs. 500 crore or more. Had the bar been lower, the amount of loans owed would cross over Rs. one lakh crore, the judges commented.

"Why should you withhold the information?" the court questioned. "People should know how much money a person has borrowed and how much money he needs to pay back. The amount payable should be known to public."

Senior lawyer Prashant Bhushan, arguing that the unpaid loan amount should be revealed, referred to the Supreme Court ruling in December last that the RBI cannot hide information solely because of the embarrassment it may cause.

The court had earlier expressed concern over the growing amount of unpaid loans and said "people are taking thousands of crores and running away by declaring their companies insolvent, but poor farmers who take small amounts of Rs. 20,000 or Rs.15,000 suffer."

A group of 18 banks are trying to recover around Rs. 9,000 crores owed by liquor baron Vijay Mallya, who quietly flew to the UK in March.

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