Canara Bank is the latest to join other big public sector banks (PSBs) that have written off bad loans worth thousands of crores of rupees and recovered paltry amounts from big defaulters.
Like other PSBs, Canara Bank also refused to share this information as well as names of defaulters under the Right to Information (RTI) Act and instead asked the applicant to check its annual reports.
Data shared by Pune-based RTI activist Vivek Velankar shows that during the past eight-year period from FY12-13 to FY19-20, Canara Bank wrote off a total of Rs47,310 crore while recovering just 19% or Rs8,901 crore from defaulters.
As happened with other PSBs that we have reported so far, Canara Bank too used vague reasons (privacy) for not sharing information like names of big defaulters with a bad loan of Rs100 crore and above. In the reply to the RTI, the Bank says, "Information sought is the personal information of the concerned and if disclosed would invade the privacy of those concerned and its disclosure does not have any relationship with public interest or activity and is exempted under section 8(1)(j) of the RTI Act."
An aggrieved Mr Velankar, who is also president of the Sajag Nagrik Manch, asks, "When a common borrower defaults, the same banks publish his name and all details through advertisements in newspapers. Then why do they want to keep names of big defaulters hidden
under the privacy cause? Why doesn’t the 'privacy' clause apply while publicising names of common borrowers?"
In several judgements, the central information commission (CIC) had ruled that, to qualify for the exemption under Section 8(1)(j) of the RTI Act, the information must satisfy certain criteria, such as personal information and public interest.
Ordinarily, the adjective 'personal' is attributed to that which applies to an individual and not to an institution or a corporate. Therefore, it flows that 'personal' cannot be related to institutions, organisations or corporates, especially publicly listed entities with a large shareholding of retail investors.
Hence, Section 8(1)(j) of the RTI Act cannot be applied when the information concerns institutions, organisations or corporates.
Former central information commissioner Shailesh Gandhi had observed in a judgement, “...disclosure of information, which is routinely collected by the public authority and provided by the public servants, cannot be construed as an invasion of the privacy of an individual and must be provided to an applicant under the RTI Act."
In the case of Canara Bank, the information on loan write offs, recovery and all other details like names of borrowers are collected and then reported to the Reserve Bank of India (RBI) as statutory obligation. In the circumstances, Canara Bank has no right to withhold this information under any Sections of RTI Act. Yet, the bank has refused to share names of big defaulters with Mr Velankar.
Technically speaking, when debts are written off, they are removed as assets from the balance sheet because the bank does not expect to recover payment. This practice is frowned upon by experts but is routinely done by banks as part of their tax management clean-up process.
In contrast, when a bad debt is written down, some of the bad debt value remains as an asset because the bank expects to recover it. However, as State Bank of India (SBI), Bank of Baroda (BoB), Bank of Maharashtra (BoM), Union Bank of India (UBI), IDBI Bank, Punjab National Bank (PNB) and Indian Overseas Bank (IOB) have shown, most of the times, there is no recovery or negligible recovery for the amounts written off.
Such write-offs also debunk the aggressive posturing by the government and policy-makers about their so-called recovery efforts.
Union Bank of India too wrote off bad debt worth Rs26,072.81 crore between FY11-12 and FY19-20 (this information pertains only to loans of over Rs100 crore).