Disclose names of defaulters, suggests parliamentary panel

Concerned over burgeoning non- performing assets (NPAs), a Parliamentary committee has made a case for amending banking laws, including the SBI Act, to provide for disclosure of names of loan defaulters.

There is an urgent need for banks to reduce stressed assets and clean up the balance sheets which would increase their ability to raise capital and improve credibility, the Committee on Petitions said in its report tabled in Parliament today.

It also said: "The Committee appreciate the remedial measures being taken by the Government/Reserve Bank of India (RBI) to put a check on the burgeoning NPAs and to reduce the volume of stressed assets in the banks."

It appreciated the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC); making amendments in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act and the Recovery of Debts due to Banks and Financial Institutions (RDDBFI) Acts to improve resolution/recovery of bank loans.

The report said the Committee had recommended that the government make appropriate amendments in "the archaic provisions of the SBI Act and other relevant laws to disclose the names of individuals - who owe money to the Banks or are responsible for bad loans on account of their default to repay".

In this regard, it said, the Committee appreciate that RBI is in favour of making available information on wilful defaulters in public domain.

However, it added, the Ministry of Finance (Department of Financial Services)/RBI are of the opinion that the disclosure of information of other defaulting borrowers may not be in the interest of the revival of their distressed business units which may be otherwise viable.

The Committee reiterated that they should undertake an "objective examination and analysis of the extant provision(s) for disclosure of details of loan defaulters in public domain by amending the existing relevant Acts/Rules vis-a-vis interest of the revival of their distressed Business Units without having any impact on their viability".

It also noted that diversion of funds by industrialists to their un-related businesses and negligence on the part of bank officials in pre-sanctioning of loans are the determining factors for bank loans turning bad.

In this regard, the report said, the Committee had earlier recommended that a proper and stern audit mechanism should be made mandatory for specific class of borrowers, especially, the big loan seekers.