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Supreme Court asks RBI to submit list of loan defaulters
The Supreme Court on Tuesday asked the Reserve Bank of India (RBI) to submit a list of loan defaulters who collectively owe more than Rs 500 crore to the public sector banks. The apex court has also asked the RBI to submit the details of restructured assets.
New Delhi: The Supreme Court on Tuesday asked the Reserve Bank of India (RBI) to submit a list of loan defaulters who collectively owe more than Rs 500 crore to the public sector banks. The apex court has also asked the RBI to submit the details of restructured assets.
The direction was issued by the court, which made the central bank a party to a 2005 case related to bad loans advanced to a few companies by the state-owned Hudco. The PIL was filed by the Centre for Public Interest Litigation (CPIL).
The bench, headed by Chief Justice TS Thakur, expressed concern over mounting bad debts of the banking system, while pointing out irregularities in sanctioning huge loans to willful defaulters in some cases.
The RBI would need to provide the information within two months, though it could keep details under "sealed cover", a directive from the Supreme Court said.
"We direct the RBI to file a detailed affidavit mentioning about the list of the companies which are defaulters of loans," the Chief Justice said as he read out the Supreme Court's interim order. The RBI had previously resisted prior court orders to reveal the names of companies who have defaulted, saying to do so risked breaching confidentiality rules.
India's banking sector, dominated by two dozen state-run lenders, is suffering from its highest stressed-assets ratio in 13 years as an economic slowdown hits company earnings, exposing the sector's history of profligate lending.
The directive from the court has not yet been uploaded on its website. RBI Governor Raghuram Rajan had said earlier this month the central bank would not stand in the way of revealing the names of defaulters if there was a public case for it.
Lawyer Prashant Bhushan, representing CPIL, told the court that about Rs 40,000 crore of corporate debt was written off in 2015. The court observed that bad debts were plaguing public sector banks. Listed banks added nearly Rs.1 trillion in bad loans in the December quarter, amounting to a 29% increase in the stock of sticky assets from end-September, as lenders responded to an RBI call to accelerate recognition of stressed assets.
Gross non-performing assets of 39 listed banks surged to Rs 4.38 trillion for the quarter ended 31 December 2015, from Rs 3.4 trillion at the end of September. The aggregate net profit of the 39 listed banks fell 98% to Rs 307 crore in the December quarter from Rs.16,806 crore in the year earlier.
