By Research Desk
about 2 years ago


By Ruma Dubey

In May 2013, UCO Bank hit the headlines when it issued an advertisement in the newspapers, with a picture of Nitin Kasliwal, CMD of S Kumars Nationwide Ltd (SKNL), who is the guarantor of a Rs 110.07-crore loan taken by Reid & Taylor.  The company had defaulted on its  Rs.110 crore debt and UCO Bank has taken this bold step of naming and shaming one of the the head honchos of India Inc. UCO Bank went ahead and also cautioned other banks against dealing with the company.

This was a first-time every occurrence and one had hoped that other banks would have also followed suit and announced names of its defaulters.  The Supreme Court (SC) issued a ruling on 16th Dec that banks and the RBI will have to soon disclose the name of defaulters to people seeking such data under the Right to Information (RT) Act. The SC has ruled that bankers will have to provide information of defaulters and irregularities on grounds of economic interest, commercial confidence, and fiduciary relationship. This, the SC had to clarify as many appeals were made by RBI, NABARD and ICICI Bank against such disclosure. They raised issues like banking rules and confidentiality, hiding under this veil, preventing such important data from being known to all. SC was very strong in its ruling, it in fact said, “Facts reveal that as banks are trying to cover up their underhand actions, they are even more liable to be subjected to public scrutiny."

What comes as a shock is that RBI which we recognize as a moral and ethical watchdog, was against revealing this information , saying that it would cause a lot of economic unrest. Hopefully, this SC ruling will now ensure that RBI provides more transparency and is more duty bound towards the people and not the companies.

Why not give the names? Yes, when promoters of companies default, the banks should break free of their ‘political’ shackles and make full use of  the given right to freedom of speech and expression. If banks can send hooligans to recover money from small house owners, stick large notices on doors of even smaller homes, surely bigger action is required when companies default on such large amounts. Our Finance Minister had told the banks famously that they should act against rich promoters of poor companies. The barb then was directed against Vijay Mallya but it extends to all the others too.

Yes, the Indian banking is largely discriminatory. Someone like Mallya gets a waiver for crores of rupees of debt while people like you and me, would not get a waiver for even one single paisa. How is this fair? A flamboyant industrialist gets treated like a ‘responsible’ citizen when he has dodged taxes, not paid salaries, not paid for fuel and yet, goes around spending money on irrelevant purchases?  Money power alone works, especially in banks.

Did you know that currently some 7,265 borrowers who owe banks more than Rs.25 lakh each and are classified as wilful defaulters? And they all together owe more than Rs.64,000 crore, which is almost one-fifth of the bad debts in the stressed banking system. According to RBI estimates, bad loans account for 11% of all outstanding loans of Indian banks, but Credit Suisse reckons the figure could be as high as 17%.

This brings us back to the question - why do we have wait for the RBI or the banks to voluntarily give this information?

Hopefully, in the coming days we will see a deluge of RTI being filed and the can of worms, eating away at the Indian banking system, rotting it away, will finally be exposed.

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