88 defaulters cost public sector banks Rs 1.07 lakh crore, reveals RTI query

Thanks to 88 biggest defaulters in the country, public sector banks in India have virtually lost Rs 1.07 lakh crore in bad debts.

Information disclosed by the RBI under the RTI Act, for the first time, has revealed the exact number of borrowers which owed more than Rs 500 crore to the public sector banks, and their loans had to be declared as bad debts.

The response received by the CNN-News18 disclosed that there were just 88 borrowers which owed more than Rs 500 crore each. However, the total amount written off turned out to be Rs 1,07,423 crore – on an average Rs 1220 crore each borrower.

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. Reporting made mandatory by the RBI through its notifications in 2014-15 have prompted the banks to come out clean on bad loans.

Information disclosed by the RBI under the RTI Act, for the first time, has revealed the exact number of borrowers which owed more than Rs 500 crore to the public sector banks, and their loans had to be declared as bad debts.

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 also could 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.

Through a series of notifications and circulars, RBI has implored upon the banks to disclose bad loans, and avoid juggling soured loans taking refuge of technicalities.

The central bank has provided for a new framework so that banks must acknowledge a bad loan almost instantly.

The RBI, in June this year, issued a revised circular on the resolution of stressed assets for lenders to resolve NPAs of Rs 2000 crore and more, and maintained that new norms provide a framework for early recognition, reporting and time-bound resolution of stressed assets.

A day ago, CNN-News18 had reported about write-offs in respect of borrowers to the tune of Rs 100 crore and more. RBI has provided separate data in terms of unique borrowers with outstanding of Rs 100 crore and more.

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 defaulters who owe over Rs 500 crore and 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 however. that disclosing the names of the biggest defaulters would dent the “fiduciary relationship” between the RBI and the banks, and between the banks and customers.

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 Supreme 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.