SC directs RBI to give the names of big defaulters

RSTV Bureau
File Photo: RBI Governor Raghuram Rajan has asked banks to clean up their balance sheets.

File Photo: RBI Governor Raghuram Rajan has asked banks to clean up their balance sheets.

The Supreme Court today directed the Reserve Bank of India to provide a list of entities which are defaulters of bank loans of over Rs 500 crore. Expressing serious concern over the rise in bad loans of public sector banks, the apex court asked the Reserve Bank to place the list of big defaulters before it in a sealed cover in six weeks time.

Non performing assets of public sectors banks rose to over Rs. 3 lakh crore or 4.62% of the total advances of public sector banks in March 2015.

The apex court also asked the Reserve Bank of India (RBI) to provide within six weeks the list of companies whose loans have been restructured under corporate debt restructuring schemes.

A bench headed by Chief Justice T S Thakur asked for the list of loan defaulters to be placed before it in a sealed cover.

The bench, also comprising Justices U U Lalit and R Banumathi, wanted to know how the state-owned banks and financial institutions were advancing large-scale loans without proper guidelines and whether there was adequate mechanism to recover them.

The court made RBI party to a PIL filed in 2005 by an NGO Centre for Public Interest Litigation (CPIL) in which it has raised the issue of loans advanced to some companies by state- owned Housing and Urban Development Corporation (HUDCO).

Advocate Prashant Bhushan, appearing for CPIL, submitted that about Rs 40,000 crore of corporate debt was written off in 2015.

His submission evoked response from the bench which said that bad debts were plaguing the public sector banks.

The bench expressed surprise that no concrete steps were taken for the recovery of loan from the defaulters. “You have a list of major defaulters who run empires and yet default,” the bench asked during the hearing.

The steep rise in bad loans of public sector banks and write offs have become cause of concern for policy makers and reserve bank. Finance Minister last week said that the banks would be empowered to recover the bad loans and work  the bankruptcy law was on an advance stage.

(With agency inputs).