Even as the Supreme Court on Tuesday decided to examine whether the Reserve Bank of India can disclose names of big defaulters in view of its confidentiality claims, the banking regulator said any revelation about outstanding dues to banks will “impact the economy of the country”.

A bench headed by Chief Justice TS Thakur, which is looking into the problem of huge bad debts of nationalised banks, said that if the confidentiality clause prevents the RBI from revealing the names of defaulters, it should at least make public the “huge and substantial” outstanding debts to banks.

After having a look at the RBI’s list of defaulters that was given to the court in a sealed cover, the CJI observed that “the amounts outstanding is very large… The next question we would ask is, what steps are you taking to recover them… Also, what about the status of non-performing assets?”

“Can the total amounts in default be disclosed? There is no confidentiality in figures; but the names may be kept out,” Thakur said.

However, RBI senior counsel Jaideep Gupta told the court that the information was obtained in the fiduciary capacity and any disclosure of the aggregate figure may have an impact on the country’s economy and reduce confidence within the business and investment sectors.

He further said that any disclosure would be violative of the provisions of the the RBI Act, 1934, the Credit Information Companies (Regulation) Act, 2005, and the Public Financial Institutions (Obligation as to Fidelity and Secrecy) Act, 1983, which grant immunity from disclosure of details of non-performing assets.

The RBI argued that there is more and more decentralisation of the functions of the central bank and, therefore, it was a “herculean task” for it to get data from all banks. Gupta further said that the regulator does not interfere in the day-to-day functions of the banks.

Expressing displeasure about the huge bad loans in the banking industry, the apex court criticised the banks for failing to go after big defaulters.

“People are taking thousands of crores to run their empires and then later declare insolvency and do restructuring in BIFR only to take more loans from other sources. This is when poor farmers are driven to suicide for being unable to pay their small debts,” the CJI observed, while deciding to hold detailed hearings on whether confidentiality between banks and their rich defaulters would prevent the watchdog from disclosing names and “very substantial debt figures” of those who have taken over Rs 500 crore loans from banks.

“We will have a focused and articulate debate on these issues. Primary question is whether there is any confidentiality on information relating to outstanding debts over Rs 500 crore,” Thakur said, asking counsel Prashant Bhushan, appearing for Centre for Public Interest Litigation, an NGO and the petitioner, to formulate various questions and circulate them among other parties to have a “more focused debate” on the issue. It also posted the matter for further hearing on April 26.

The bench also added the Indian Banks’ Association and the finance ministry as parties to the case and asked them to tell the court how they intended to deal with the staggering figure of recoverables.

Thakur also observed that “if banks don’t manage their funds prudently, advance loans recklessly, violate guidelines grant loans on property already mortgaged, are you (RBI) not supposed to keep a vigil and supervise how the loans have to be recovered? In how many cases you have taken action against those who have run away?”

Bhushan insisted that the RBI was bound to reveal such information under the Right to Information Act and that a 2015 judgment of the Supreme Court has already favoured transparency rather than secrecy. He also accused the RBI of washing its hands of the problem by asking banks not to report defaults above `500 crore to it any more, and instead to report them to chief information commissioners directly from December 2014 onwards.

While hearing the PIL by the CPIL, the Supreme Court had asked the RBI to provide within six weeks the list of defaulters owing Rs 500 crore or more to public sector banks and continue to lead a “lavish lifestyle”. The bench had had last month taken suo motu cognizance of a newspaper report that Rs 1.14 lakh crore of bad loans had been written off by state-owned banks between 2013 and 2015.

The petition, which was filed in 2003 by the NGO, had originally raised the issue of loans advanced to some companies by state-owned Housing and Urban Development Corporation. The plea had said that about `40,000 crore of corporate debt was written off in 2015. #casansaar (PTI - Financial Express)