Supreme Court asks RBI for list of companies who defaulted on 500cr loans

SC directs RBI to furnish details of defaulted loands in a sealed cover

February 17, 2016

Supreme Court asks RBI for list of companies who defaulted on 500cr or more loans

Defaulted loan list demanded by Supreme Court

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]B[/dropcap]ad loans are in the spotlight once again. Six weeks is the time given by the Supreme Court to Reserve Bank of India (RBI) to furnish it, a list of companies who have defaulted on loans by banks and financial institutions in excess of ₹500 Crore, or whose loans have been restructured under Corporate Debts Restructuring Scheme. The list is to be filed in a sealed cover.

It is interesting to note that RBI had asked all banks to keep track of defaulted loans of over Rs. 1 crore in 1994 itself!

On Tuesday, while asking the RBI to file an affidavit, a bench of Chief Justice T.S. Thakur, Justice R. Banumathi and Justice Uday Umesh Lalit directed that the list of defaulting companies be furnished in a sealed cover after one of the counsel told the court about commercial confidentiality of the companies in making them public.

Seeking the list of the defaulters, Chief Justice Thakur asked the counsel for the RBI if it had the list of the “major defaulters today who run empires and yet default.”

“You lend money, you know it will not come back, and then declare it bad loans,” the court told Solicitor General Ranjit Kumar, who seeking to shift the blame on the previous UPA government, said: “That had happened in last ten years. (As a consequence) economy is not growing, we don’t have money to pay.”

Noting that default in payment of bank loans happens in other countries as well and it was part of the economic process, the court said that the banks should be vigilant in recovering the loans.

[dropcap color=”#008040″ boxed=”yes” boxed_radius=”8px” class=”” id=””]T[/dropcap]he court order came in the course of the hearing of a public interest litigation pointing to loans given by HUDCO in 2003 to some of the companies with questionable track records.

Addressing the court, Prashant Bhushan appearing for NGO Centre for Public Interest Litigation (CPIL), told the court that there is a circle where the mortgaged assets of a defaulting company again go back to it when those assets are auctioned to recover bad loans.

There is a circle where the mortgaged assets of a defaulting company again go back to it when those assets are auctioned to recover bad loans.

Bhushan told the court that the Central Information Commission had passed nine orders in nine cases, directing disclosure of defaulters’ identity and each time the commercial confidentiality clause is invoked to block the information by the banks.

Bhushan told the court that the apex court by its December 16, 2015 order had said that the banks and their apex regulatory body, the RBI, could not withhold information on defaulters, losses and alleged illegalities of the banks by invoking the exception under the Right to Information Act.

He said that this verdict had not yet been complied with.

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(IANS)