Over Rs 500 cr defaults: SC gets loan defaulters’ names, in a sealed coverhttps://indianexpress.com/article/business/economy/over-rs-500-cr-defaults-sc-gets-loan-defaulters-names-in-a-sealed-cover-4617253/

Over Rs 500 cr defaults: SC gets loan defaulters’ names, in a sealed cover

RBI advocating to keep names secret in ‘economic interest’ of the country

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The Supreme Court. (File Photo)

The Central government Monday handed over to the Supreme Court a list of corporate entities owing more than Rs 500 crore each to banks. Even as it admitted that the total amount of default in repaying loans is Rs 5 lakh crore in 70,000 cases of non-payment, the government refrained from making public names of the biggest loan defaulters in the country, and submitted the list confidentially in a sealed cover envelope.

Submitting its affidavit pursuant to an order of the apex court in January, the Union finance ministry said that it was adducing list of corporate entities where the amount outstanding is in excess of Rs 500 crore “in a sealed cover for perusal of the court”. The RBI has been advocating for keeping the names of defaulters secret in “economic interest” of the country.

But the ministry was compelled to disclose that as many as 2,277 cases of loan defaults were pending for more than 10 years in debt recovery tribunals (DRTs) across the country. The affidavit revealed that on an average each of the 34 DRT had 67 cases awaiting decision on loan recovery for at least 10 years.

Kolkata tops the list with highest number of cases pending for more than 10 years. Three tribunals in Kolkata alone have 558 cases, which comprise almost 1/4th of the total number of such old cases pending in various parts of the country. DRTs in Mumbai came second with 358 cases older than 10 years while Hyderabad followed with 297 such cases. The statistics pointed out that DRTs in Kolkata, Mumbai and Hyderabad constituted more than half the total number of cases pending for at least 10 years. Frequent adjournments has been underlined by the Ministry as the chief cause of delay in disposal of these cases.

The government was asked to explain the huge amount of loans written off by public sector banks (PSBs) and others in the last five years after the top court took suo motu cognizance of The Indian Express report dated February 8, 2016, that Rs 1.14 lakh crore had been written off as non-performing assets (NPAs) by 29 state-owned banks in the last three years.

Arguing in connection with a PIL over alleged irregularities in advancing loans by the Housing and Urban Development Corporation Limited, advocate Prashant Bhushan had adduced a copy of the report on bad loans and write-offs published by The Indian Express. The case is now likely to be taken up for hearing on April 21. In its affidavit, the government has now admitted: “Due to more inflow of cases over a period, more than 70,000 cases are pending in these tribunals (DRTs), involving an amount of approximately Rs 5 lakh crore.”

The affidavit added that in order to improve recovery through speedy resolution of cases, The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 has been enacted that amends four pertinent laws on recovery of debts. It, however, admitted that no scientific study has been conducted while prescribing various timelines for complying with various procedure under the new laws or with respect to availability of infrastructure in DRTs. The government has said that it has proceeded on the basis of wide scale consultations.

In January, the court had rued that most of the 34 DRTs did not have basic infrastructure and manpower leading to thousands of cases pending for more than 10 years. The bench said the chairperson of Debt Recovery Appellate Tribunal at Allahabad wrote a letter to the CJI on December 9 saying the absence of infrastructure and facilities forced him to resign. The court noted “it was symptomatic of each DRT, which suffers from lack of manpower and resources”.

The court had then directed the Centre to file an affidavit detailing a “specific action plan including time-schedules within which the existing infrastructure (of DRTs) would be upgraded so as to achieve the time-frame of 180 days for disposal of claims”.

2,277 cases pending for over 10 years in DRTs

* The finance ministry disclosed that as many as 2,277 cases of loan defaults were pending for more than 10 years in debt recovery tribunals across the country

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* The affidavit revealed that on an average each of the 34 debt recovery tribunal had 67 cases awaiting decision on loan recovery for at least 10 years