Free
Press Journal: National: Wednesday, June 26, 2019.
Emboldened
by the directive of the Supreme Court to the Reserve Bank of India that the
Bank must reform its transparency guidelines and provide details on top wilful
loan defaulters, the public sector banks have started the process of naming the
wilful corporate defaulters without waiting for the RBI decision.
The
process has started with the UCO Bank and already other PSBs have started
discussing the issue at the board level so that the management can come out
with the names of the wilful defaulters.
Recently,
the Kolkata based UCO bank published the name of Yashovardhan Birla, along with
his photograph in newspapers as a wilful defaulter because of his company
failing to repay Rs 67.65 crore for long and showing no intention to repay.
This
created a storm in the banking circles as the Finance Ministry and the RBI have
been refusing to make public the list of big wilful corporate defaulters.
On
April 26, 2019, the Supreme Court heard a contempt plea regarding RBI’s refusal
to divulge details of defaulters. The Court criticised the RBI and directed the
apex bank to reform its transparency guidelines and provide these details to
the public.
Two
months have passed since then but the RBI has not come out with any follow-up
action on the Supreme Court directive while the affected public sector banks
have started taking action without waiting for any fresh RBI directive.
After
UCO Bank, the UBI and the Syndicate Bank have discussed the issue and, many
other bank boards will be shortly taking up the issue. They are impatient for
taking action and going public with the names of the big wilful corporate
defaulters.
Nearly
50 per cent or Rs 4.5 lakh crore of the total value of India’s non-performing
assets (NPAs) are due to loans taken out by the top 100 borrowers, an RTI query
filed by The Wire has revealed.
The
Reserve Bank of India (RBI) said that as of December 31, 2018, loans taken by
the top 100 borrowers created NPAs worth Rs 4,46,158 crore. This means that on
average, each of the top 100 borrowers is responsible for NPAs worth Rs 4,461
crore. The RBI refused to provide details on who these top 100 borrowers are.
According
to an answer given by the then finance minister in the Rajya Sabha on February
5, 2019, the total value of NPAs in scheduled commercial banks was Rs 10,09,286
crore as of December 31, 2018. Of that, the value of NPAs in public sector
banks was Rs 8,64,433 crore.
This
means that 44 per cent of the total NPA value is owned by just the top 100
borrowers. And if only public sector banks are considered, then 52 per cent of
the total NPA value is owned by these top 100 borrowers. As of March 2019, 9.3
per cent of the total given loan amount had been declared as NPA.
The
highest court said on April 26 that this was RBI’s last chance and that if the
bank still refused to provide details, action would be taken against the
central bank for contempt of court.
Yet,
in response to the RTI filed by The Wire, the RBI refused to provide details on
the accounts of the top 100 borrowers. It did not provide the names of the
account holders, the amounts owed by them or the interest rates at which they
have borrowed money. The RBI said that such information is not available.
The
central bank said that it collects information regarding debt under Section
27(2) of the Banking Regulation (BR) Act 1949 and under Section 28 of the RBI
Act, 1934. The RBI’s response said: “As per Section 28 of the BR Act, RBI can
only disclose information collected under Section 27 (2) of the Act in such
consolidated manner as it deems fit.”
The
bank said that in terms of Section 45(E) of the RBI Act, RBI is prohibited from
disclosing credit information except under certain conditions as stated in the
Act.
The
number of wilful defaulters in nationalised banks has increased by over 60 per
cent to 8,582 in five years to March 2019, the government sources say. By the
end of the 2014-15 fiscal, the figure stood at 5,349. Rising consistently since
2014-15, the number of such borrowers increased to 6,575 in 2015-16; 7,079 in
2016-17 and further to 7,535 in 2017-18.
As
per data reported by nationalised banks, till March 31, 2019, suits for
recovery have been filed in 8,121 cases. In cases involving secured assets,
action under the provisions of the SARFAESI Act has been initiated in 6,251
cases. Further, in accordance with RBI instructions of initiation of criminal
proceedings wherever necessary, FIRs have been registered in 2,915 cases.
Besides,
vide Sebi regulations, wilful defaulters and companies with wilful defaulters
as promoters/directors have been debarred from accessing capital markets to
raise funds, she said. In addition, the Insolvency and Bankruptcy Code, 2016
has debarred wilful defaulters from participating in the insolvency resolution
process.
For
effective action against wilful defaulters fleeing Indian jurisdiction, the
Fugitive Economic Offenders Act, 2018 has been enacted to provide for
attachment and confiscation of property of fugitive offenders and has
disentitled them from defending any civil claim.
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