SC on direct action; asks RBI to submit the list of big defaulters

The government and RBI are facing criticism from the Supreme Court regarding the way in which bad loans are settled without penalizing the defaulter. While hearing a PIL filed by an NGO represented by Prashant Bhushan the court has initiated direct action on the matter.  

The apex court has asked RBI to submit the list of defaulters with above Rs 500 defaults.

“What business are you doing if you don’t have the information”- the bench that included Chief Justice TS Thakur has asked the RBI.

The RBI has requested six weeks time to submit the sealed cover including the name of the big defaulters. The SC has agreed to it.

On its part, the government said defaulters are not set free.

Already, the most popular way to reduce the NPA in the country- restructuring of debt under which the defaulter gets more time and a lightened debt burden has been massively employed.

Another way that has technically improved the balance sheets of banks is the debt write-off package. So far around 75000 crore has been written off to save banks. At the same time, it has posed questions about it being a safe haven for defaulters.

The NGO has questioned both debt write-off and restructuring as it lets the defaulters to escape.

About the information about big borrowers, the RBI itself has a mechanism called Central Repository of Information on Large Credits (CRILC) to collect, store, and disseminate credit data to lenders about borrowers who have loans above Rs 50 million.