The Reserve Bank of India (RBI) told the Supreme Court Tuesday that it was not advisable to make public the names of defaulters who owed over Rs 500 crores to public banks.
The banking sector regulator submitted a list of such defaulters, in accordance with the top court’s February 16 order.
RBI said it was “extremely necessary to keep the confidentiality of the information” as disclosing names of defaulters will adversely affect business climate and could impact “scores of employees” in such entities, RBI said.
“It...may have adverse impact for the business and in a way, may accentuate the failure of the business, rather than nursing it back to health,” RBI said in an affidavit.
It said sharing of information among banks regarding defaulters “facilitate better follow up and recovery”, however, putting it in public “may dissuade legitimate risk taking and investment by good and well intentioned promoters”.
Strongly disapproving of the banks’ policy to write off such debt, the SC during an earlier hearing had asked the banks to also clarify its stand on the issue. The SC had also asked the RBI to furnish details of loans written off by public sector banks in the last five years.
Responding to the court’s query, RBI said banks write off non-performing assets as a regular exercise to clean up their balance sheets. “Substantial portion of write-offs is however, represented by technical write off which is primarily intended at cleansing the balance sheet and achieving taxation efficiency,” RBI said.
{{/usCountry}}Responding to the court’s query, RBI said banks write off non-performing assets as a regular exercise to clean up their balance sheets. “Substantial portion of write-offs is however, represented by technical write off which is primarily intended at cleansing the balance sheet and achieving taxation efficiency,” RBI said.
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