New Delhi: The Supreme Court (SC) today gave India's central bank six weeks' time to submit before it details of all companies that have either defaulted on bank loans of over Rs 500 crore or whose loans have been restructured under corporate debt restructuring schemes.
Taking strong note of the issue of rising bad debts plaguing public sector banks (PSBs), a bench comprising Chief Justice G S Thakur, R. Banumathi and U U Lalit directed the Reserve Bank of India (RBI) to file an affidavit and present the list of loan defaulters to it in a sealed envelope within six weeks.
As per reports, twenty-nine government-owned banks wrote off a total of Rs 1.14 lakh crore of bad debts between 2013 and 2015. According to the RBI, bad debts for PSBs rose from Rs 15,551 crore for the year ending March 2012 to Rs 52,542 crore for the year ending March 2015, a report in The Indian Express said citing information obtained through an RTI query.
The report further states that bad loans written off by them between 2004 and 2015 totalled over Rs 2.11 lakh crore. More than half such loans (Rs 1,14,182 crore) have been waived off between 2013 and 2015, it said.
Taking stock of the alarming situation, the SC sought to know how state-owned banks and financial institutions were advancing such huge loans without proper guidelines or an adequate loan-recovery mechanism, thereby putting a huge burden on the public exchequer.
The current move by the Supreme Court assumes significance as the RBI has so far refused to divulge details of companies that constitute the bad debts for state-owned banks. An RTI query seeking details was turned down as the central bank said it could only provide consolidated information.
Moreover, public sector banks have resorted to the name-and-shame routine to some small debtors but have shied away from naming the big defaulters.
Bad loans have weighed heavy on public sector bank books with the largest lenders experiencing a fall in their net profits or incurring losses. India's biggest bank State Bank of India reported a 67 per cent fall in consolidated net profit, which stood at Rs 1,259.49 crore in the December quarter. Loans worth around Rs 20,692 crore had turned bad, it said.
The March quarter could be worse as RBI directives of cleaning their books by the end of the fiscal year kicked in. Profits of several public sector banks took a dive after RBI directed banks to reclassify loans and set aside more money against stressed assets.