Friday, Mar 29, 2024 | Last Update : 03:46 PM IST

  Business   Supreme Court faults RBI for growing defaults

Supreme Court faults RBI for growing defaults

Published : Apr 13, 2016, 3:24 am IST
Updated : Apr 13, 2016, 3:24 am IST

The Supreme Court on Tuesday faulted the Reserve Bank of India for allowing people to run away after taking thousands of crores of rupees as loans from banks and said as a regulator RBI must act as a

The Supreme Court on Tuesday faulted the Reserve Bank of India for allowing people to run away after taking thousands of crores of rupees as loans from banks and said as a regulator RBI must act as a watchdog.

A Bench of Chief Justice T.S. Thakur and Justice Ms. R. Banumathi made this observation after senior counsel Jaideep Gupta, appearing for RBI, submitted that the names of the defaulters of Rs 500 crores or more to public sector banks cannot be disclosed. He said it was “extremely necessary” to keep these names confidential due to their “fiduciary relationship” and as per the RBI Act.

The Bench was dealing with a PIL filed in 2003 by NGO Centre for Public Interest Litigation (CPIL) seeking an independent investigation into the affairs of HUDCO in granting loans .

The CJI told the counsel if the confidentiality clause prevented RBI from disclosing the names, at least it should disclose the total amount which is in default.

He said “people taking thousands of crores to run their empires and then later declare insolvency and resort to BIFR proceedings only to take more loans from other sources. This when poor farmers are driven to suicide unable to pay their small debts and you take action against them by attaching properties.”

Pointing out that the total number of defaulters were very large and the amount involved was very huge, the CJI questioned RBI as to what action it had taken to recover loans from these defaulters.

The court also told the Solicitor General that it has enlarged the scope of the case and will examine all parameters of bad loans and defaults.

The bench issued notices to the finance ministry as well as the Indian Banks Association to clarify on huge outstanding of bad loans.

The RBI in an affidavit stated that it was not advisable to put on public domain the list of defaulters who had plundered tax payers money.

It said that disclosure of defaulters who owed over Rs 500 crore to public sector banks would adversely affect business climate in the country besides the jobs of thousands of employees working in these entities. The bench directed the matter to be listed for further hearing on April 26.

Location: India, Delhi, New Delhi