The Supreme Court wants the Reserve Bank of India to name wilful loan defaulters in RTI requests

With the Supreme Court making it clear that the Reserve Bank of India (RBI) must heed Right To Information (RTI) requests for its Annual Inspection Reports (AIR), which would reveal the names of those who have wilfully defaulted on loans, it seems we have taken a crucial step in ensuring financial transparency. While the RBI asserted that this would imperil banking secrecy laws, its argument was dismissed by Justices Nageswara Rao and MR Shah with some exceptions. They clarified that the statements of the bank, reports of the inspections and information related to the business obtained by it does not, in fact, fall under the pretext of confidence or trust. However, the question remains about whether naming and shaming will do any good.

One potential prospect is that many of those, who are afraid that their names will be revealed once the Supreme Court order is implemented, will make an offer to pay up to keep their good name. There is no doubt that there are a large number of people who owe money to the Indian banking system and have the ability to pay, but often, sometimes in connivance with bank officials, as happened with Nirav Modi and Punjab National Bank, they do not pay back, knowing full well that they will not get prosecuted. However, many ‘wilful’ defaulters are often individuals who have not quite bankrupted themselves but have failed in their business ventures. In that ambiguity, there are some aspects of privacy that are also violated, and some modifications might be necessary in the classification of wilful and ‘non-wilful’ defaulters. Then again, naming and shaming people who break the law is possibly one of the only ways to get them to repent. Unlike the Panama Papers, this data, once released, will have perfect provenance and that will mean that many of the excuses that people make when caught will be just that, excuses. There is the possibility of another major risk. Much like the hundred plus individuals, who have run away from India, some even acquiring foreign citizenship using their ill-gotten gains, will many more take pre-emptive flights out of the country? Will the fear of knowing that they might be exposed make several hundred rich fraudsters run away from Indian banks and the law? However, this is a risk that we must take, considering some countries like the United Kingdom, have opened their doors willingly to financial fraudsters. Yet other nations are very strict with such individuals and extradite them promptly. Clever fraudsters tend to hide in nations where they know their chances of prosecution are limited. They are the worst type of criminals, knowingly not paying their dues and, thus, making life harder for everyone else who pay back their loans for homes, cars and everything else properly. As the saying goes, the hands of the law are very long. But those hands should know who to catch. Lest there be any objections, remember that the banks’ total non-performing assets amounted to Rs 11.2 trillion in FY18.