RBI willing to publish defaulters list

Commercial banks have been groaning under the weight of massive non-performing assets (NPAs) and their performance has been severely affected by corporate defaults. The collective NPAs of all banks currently stand at a whopping Rs 58,000 crore. Banks like SBI, Indian Bank, Uco Bank and United Bank have run up NPAs following massive defaults by corporates.

The RBI has reportedly conveyed to the CVC that such a measure cannot be implemented in the near future as it would require changes to the Banking Regulation Act. The secrecy clause of the Act bars banks from revealing the identity of borrowers, even though they are willful defaulters. The commissioner said that he was examining the legal opinions on this.

As of now, banks don’t disclose the names of loan defaulters. Banks are allowed to disclose the names of defaulters against whom suits have been filed in the court. Some banks have even given more loans to defaulters, making a mockery of prudent lending standards.

Delivering the inaugural address at the seminar, Jalan said the Indian economy was passing through a crucial phase and that the sources of competitive advantage had changed from land, labour and capital. Capital had become mobile and was no longer a constraint. Most of value-addition was coming from services which was the fastest-growing sector, he said.

However, he said there was increasing dichotomy between the vibrant private sector and the slow public sector. "The networth of the top three individuals is higher than the networth of the state of Bihar, or Karnataka or Andhra Pradesh," he said, adding that the bulk of India continued to be illiterate and below the poverty line.

He said there should be greater interaction between the two sectors and that the problems should be viewed just a government responsibility. Taking care of the public was not solely the reponsibility of the government or public institutions. "If fiscal deficit is high, it is not just a function of the finance minister but also organisations like IMC," he added.

Earlier, National Council of Applied Economic Research director-general Rakesh Mohan project a 6 per cent growth in GDP but said high fiscal deficit was retarding growth. Ten per cent of GDP was in hidden subsidies, he said, cautioning against misuse of privatisation proceeds. He said the ultimate objective of privatisation should be to make PSUs productive.

He projected a explosion in demand in the next seven to ten years because of a rise in number of people belonging to the high-income and middle-income categories. The high-income category would increase from 4.5 million people to around 25 million people and the middle-income category from 70 million to 140 million. "There will a huge increase in household savings providing resource for the financing public infrastructure," he said.