The Supreme Court today reminded the Reserve Bank of India that it had a duty to keep a tight vigil on banks to ensure that they do not grant loans recklessly.
Making several scathing remarks two weeks after the RBI submitted a list of defaulters owing Rs 500 crore or more to public sector banks, a bench headed by Chief Justice T S Thakur asked the RBI “What are you doing to recover the money? What are the steps you are contemplating? You are the regulator and you must act as a watchdog, Are you not supposed to keep a vigil on what they are doing? Banks should not be allowed to grant loans recklessly
While submitting the list, the RBI has said it was “extremely necessary” to keep these names confidential due to their “fiduciary relationship”. The RBI even refused permission to divulge the aggregate figures saying it will have an impact on the economy
RBI had filed an affidavit on the direction of the court. The bench had last month taken suo motu cognizance of media reports that Rs 1.14 lakh crore of bad loans had been written off by state-owned banks between 2013 and 2015.
The bench had ordered the RBI to share with it names of all defaulters who owe over Rs 500 crore and continue to lead a “lavish lifestyle”.
Chief Justice T S Thakur observed: “Farmers are forced to sell land for thousand rupees and here you have those running away after taking thousands of crores as loan”.
The court has told the Solicitor General Ranjit Kumar that it has enlarged the scope of the case and will examine all parameters of bad loans and defaults. The court also issued notices to the Finance Ministry and banks associations’ to clarify on huge outstanding of bad loans
The bench asked advocate Prashant Bhushan and the lawyer for the banks to “formulate a list of questions and issues that call for deliberation” during the hearing. “Is there any confidentiality in the the report filed by the RBI in the sealed cover. That can be one of the questions”, CJI Thakur told Bhushan.