Supreme Court to examine confidentiality of bank NPAs

Business Standard‎‎‎: New Delhi: Wednesday, April 13, 2016.

The Supreme Court on Tuesday decided to examine if the total amount of defaults in repayment of loans running into “lakhs of crores of rupees” be made public, without disclosing the defaulters’ names. The Reserve Bank of India (RBI) counsel, however, resisted the proposal.

Pursuant to an earlier order of the apex court, RBI had submitted a list of individuals and companies, which had defaulted on bank loans of over Rs 500 crore, to a Bench headed by Chief Justice T S Thakur in a sealed envelope.

RBI counsel Jaydeep Gupta cited provisions in the RBI Act and the Credit Information Companies (Regulation) Act, 2005, which mandate confidentiality of such information. “The disclosure of aggregate figure may have an impact on the economy,” he told the court. RBI also informed the court that it does not interfere in the day-to-day work of the banks.

Prashant Bhushan, counsel for Centre for Public Interest Litigation, who moved the petition, argued that the RBI was flouting the December 2015 order of the court regarding confidentiality of such bank account holders.

After this, the court decided to hold a full hearing on April 26 on the issue of confidentiality. The court also issued notice to the Finance Ministry and Indian Banks’ Association so that they can also put forth their viewpoints on the subject.

The Chief Justice observed that big defaulters were running away with huge NPAs while the farmers were being harassed for small loans. “We would like to be satisfied with the steps taken by RBI. If the banks do not act prudently, there is no hope of recovering loans,” he said.

During the hearing, Bhushan countered the RBI’s claim of confidentiality, pointing out that the Supreme Court in December had dismissed the Central bank’s appeal based on fiduciary relationship and confidentiality. It was a case of an RTI applicant seeking disclosure of the banks’ non-performing assets (NPAs). Bhushan said RBI was not raising any new point.

In that particular case, the Central Information Commission had directed RBI to disclose the NPAs to the person who had sought for it. But the RBI moved the Supreme Court with various arguments, which were ultimately rejected in a detailed judgment.

Bhushan further said that after the December judgment on RTI disclosure, RBI has asked the banks not to report NPAs to it, thus absolving itself of the responsibility.