New Delhi: The Supreme Court on Friday indicated there is no merit in disclosing the names of big loan defaulters.
“We must look into the root cause of bad loans and address it rather than disclosing names of defaulters," chief justice T.S. Thakur said in an oral observation.
A bench comprising the chief justice and justices D.Y. Chandrachud and A.M. Khanwilkar was hearing a 2003 case related to bad loans advanced to a few companies by state-owned Housing and Urban Development Corp. Ltd.
The court also asked the centre to file a comprehensive report regarding non-performing assets in various banks. In April, the court had asked the government to set up a committee to look into the issue of bad loans being written off by public sector banks.
The court’s observations made on Friday are contrary to its earlier stance on naming defaulters of loans above Rs500 crore.
On 24 October, the apex court had asked the centre and the Reserve Bank of India (RBI) why the names of defaulters of loans above Rs500 crore should not be made public.
RBI had earlier told the court that it is in the interest of banks that names of companies remain undisclosed. Besides, not all companies were wilful defaulters. On 30 March, RBI had submitted a list of big loan defaulters in a sealed envelope to the apex court, stating that disclosing their names may have an adverse impact on businesses.
While banks make names of individual defaulters public, the same does not apply to companies. In a notification dated 29 September, RBI has set norms for banks in publishing photographs of wilful defaulters in view of the ‘sensitivity’ of the issue.
Solicitor general Ranjit Kumar, appearing for the centre, told the court that introduction of the Bankruptcy code is a step taken to tackle the issue of bad loans.
The case will be heard next on 12 December.