Thursday, November 17, 2011

By December, you will know who top bank defaulters are

By December, you will know who top bank defaulters are


The Central Information Commission (CIC) has asked the Reserve Bank of India (RBI) to make public names and other details of top 100 industrialists who defaulted on loans from public sector banks. It turned down the bank's plea of holding this information in 'fiduciary capacity' in the light of larger public interest.
The direction came on an application of one PP Kapoor, a resident of Haryana, who had sought details of default in loans taken from public sector banks by industrialists including the name of top 100 defaulters. But when RBI refused to furnish the information, he approached CIC.
In his decision on Tuesday, information commissioner Shailesh Gandhi said it is often seen that banks and financial institutions continue to provide loans to industrialists despite their default in repayment of an earlier loan.
He directed the RBI to display on its website complete information on all such industrialists as part of suo motu disclosure mandated under section 4 of the RTI Act before December 31 and also asked it to update it every year.
"Information about industrialists who are loan defaulters of the country may put pressure on such persons to pay their dues. This would have the impact of alerting citizens about those who are defaulting in payments and could also have some impact in shaming them," said Gandhi in his order.
"Details of defaulters of public sector banks should be revealed since it would be in larger public interest. Revealing these would serve the object of reining in such defaulters, warning citizens about those who they should stay away from in terms of investments and perhaps shaming such persons or entities," he added.
He also said, "The Commission is convinced that the benefits accruing to the economic and moral fibre of the country, far outweigh any damage to the fiduciary relationship of bankers and their customers if the details of the top defaulters are disclosed."
He also rejected RBI's contention that disclosure of such information would affect the economic interests of India stating that, "if it means that such borrowers would not bank with public sector banks for fear of exposure, it would in fact be in the economic interest of the nation."
"It is also unlikely that the economic well-being of the nation could get affected adversely by disclosing the names and details of defaulters. The Indian economy is dependent on far stronger footings," he added.

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