Thanks to 88 biggest defaulters in the country, public sector banks in India have virtually lost Rs 1.07 lakh crore in bad debts. On an average, the amount declared as bad loans turns out to be around Rs 1,220 crore per borrower.
Information disclosed by the Reserve Bank of India (RBI) under the Right to Information (RTI) Act, for the first time, has revealed the exact number of borrowers whose loans worth more than Rs 500 crore each to public sector banks were declared as bad debts. The response received by CNN-News18 by filing a series of RTI applications, disclosed that there were just 88 borrowers who owned more than Rs 500 Crore each. However, the total amount written off turned out to be Rs 1, 07,423 crore
The RTI application had sought to know about the biggest borrowers in respect of which the public sector banks had to write-off loans to clean their account books.
The reply from the RBI maintained that complete data and the year-wise break up of writing off loans to the tune of Rs 500 crore and more was not available.
The RBI could also not furnish information about the private banks in this regard. But the data as reported by the banks to the RBI-DBS made it clear that only 88 borrowers had a massive amount of over 1 lakh crore written-off since they did not repay the loans.
In persistent efforts, the RBI through a series of notifications and circualars, has implored upon the banks to disclose bad loans and further avoid juggling soured loans under the excuse of technicalities. For this, it has also provided a new framework so that banks acknowledge a bad loan almost instantly.
The RBI, in June this year, issued a revised circular for lenders to resolve Non Performing Assets (NPA) of Rs 2,000 crore and above. It maintained that the new norms would provide a framework for early recognition, reporting and time-bound resolution of stressed assets.
CNN-News18 had earlier reported that the Indian banking system has lost Rs 1.76 lakh crore on account of non-performing loans of 416 defaulters - each owing Rs 100 crore or more – being written off.
In 2016, the RBI had submitted to the Supreme Court a list of defaulters owing Rs 500 crore or more to public sector banks after the top court asked for names of all the defaulters who continue to lead a “lavish lifestyle”.
The central bank had then conceded before the court that it does not have information about loan accounts, involving Rs 500 crore or more, which were restructured before June 2014.
It had, however, insisted that disclosing the names of the biggest defaulters would dent the “fiduciary relationship” between RBI and the banks on one hand and between banks and their customers on the other.
This case has not been heard by the Supreme Court in the last two years and hence, the question as to whether the names of the biggest defaulters should be disclosed or not, is yet to be decided.
In its RTI reply, RBI has cited the provisions of Section 45-E of the RBI Act, 1934, which prohibits disclosure of credit information even though a 2015 ruling by the apex court held that “RBI is clearly not in any fiduciary relationship with any bank,” and that the central bank is supposed to uphold the public interest and not the interest of individual banks.