Time and again, public sector banks (PSBs) in India, which are public authorities defined under the Right to Information (RTI) Act, avoid sharing information about big defaulters. State Bank of India (SBI), while refusing to share names, has still accepted that it recovered a mere 11% or Rs15,476 crore of the total loan write-offs amounting a massive Rs1,41,248 crore over the past nine financial years.
Pune-based activist Vivek Velankar, also a shareholder of SBI, had filed an RTI application asking SBI to share names of those who had defaulted on repayment of loans of Rs100 crore and above. In June this year, SBI flatly refused to share names of big defaulters, discarding even a pretence of accountability under the Act.
This year, SBI refused to give him information both, as an RTI applicant and a shareholder of the Bank. Sham K, assistant general manager for compliance and company secretary of SBI, said, "As Bank is under statutory and regulatory obligations to maintain the confidentiality of customer data, the Bank is not in a position to share the account or customer-specific information."
On filing an appeal, the first appellate authority (FAA) partly upheld Mr Velankar’s appeal and shared information on debt written off and recovery made over the past nine years.
The information shows that between FY12-13 to FY20-21, SBI has written off loans worth Rs1,41,208 crore and recovered just 11% or Rs15,506 crore from big defaulters.
As for defaulters, the CPIO wrote, "The information sought is related to third parties including commercial confidence or trade secrets and is exempted from disclosure under section 8(1)(d)(e) and (j) of the RTI Act." The CPIO further told Mr Velankar to search SBI's annual reports to find information on written off accounts and recoveries.
Mr Velankar, who is president of the Pune-based Sajag Nagrik Manch, says, "If this indeed is a matter of confidentiality or fiduciary relations, then how did SBI give me the entire list with names and why not this year? When a common borrower defaults, the same banks publish his name and details through newspaper advertisements. Why do they want to keep the names of defaulters hidden? Why doesn't the 'confidentiality' or 'fiduciary' clause apply while publicising the names of common borrowers?"
Former central information commissioner and RTI activist, Shailesh Gandhi, has been quite vocal about the misuse of Section 8(1)(j) by PIOs to deny information. While speaking at a webinar organised by Moneylife Foundation, he reiterated, "Everybody will have their various interpretations. In my opinion, that is why a proviso was given only for Section 8 (1)(j), which said that 'provided the information which cannot be denied to the Parliament or state legislature should not be denied to any person'."
According to the analysis done by Mr Velankar, during the past nine financial years till FY20-21, SBI wrote off debts worth Rs2.69 lakh crore and recovered just 16.69% or Rs44,974 crore from defaulters.
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.
Experts frowned upon this practice but it is routinely done by banks as part of their tax management clean-up process. The beneficiaries are invariably some of our biggest industrialist defaulters.
In contrast, when bad debt is written down, some of its value remains an asset because the bank expects to recover it. However, as SBI has shown, there is negligible recovery for the amounts written off most of the time.
An aggrieved Mr Velanakar says, "If a bank has practically lost hopes of recovery and has, hence, written off the loan, why should such a loan get the shield of secrecy? When a common borrower defaults, the same bank publishes his name and details through advertisements in newspapers. Why then are the names of bigger defaulters protected? Why don't the 'confidentiality' and 'fiduciary relation' clauses apply while publicising the names of the common borrowers?"
As reported by Moneylife, several banks and financial institutions are using all possible ways and means to keep their records hidden from public view.
Such write-offs also debunk the aggressive posturing by the government and policy-makers about their so-called recovery efforts.
All this shows an underhand nexus between the banks and the defaulters as a distinct possibility and merits investigation at the highest level.