Parliament panel for amending laws to disclose loan defaulters’ names

parliamentary panel has asked the finance ministry to amend banking laws, including SBI Act, to provide for disclosure of names of loan defaulters by banks to tackle the menace of mounting NPAs.

Section 44 of the State Bank of India Act, 1955 as well as some other clauses of confidentiality in the relevant laws invariably prohibit disclosing the names of individuals, who owe money to banks or are responsible for bad loans on account of their failure to repay.

According to the report of the committee, the names of defaulters are, however, shared with the Reserve Bank of India and the Credit Information Bureau Limited (CIBIL).

The report submitted in Parliament recently also take note of the averments made by the Finance Ministry (Department of Financial Services) that there is no proposal to amend the relevant provisions of law to disclose the names of defaulters and publish the same in public domain.

The Committee on Petitions said that in view of serious magnitude of the problem of bad loans, wilful defaulters should be dealt with sternly and the amount due from them should be recovered within a specified time frame.

“...there is now an urgent need to make a clear distinction between ‘wilful defaulters’ and ‘other defaulters’ in the procedure prescribed under the relevant Acts so that the wilful defaulters should be dealt with sternly and the loan amount is recovered from them within a specified time frame,” it said.

SECTION 44 OF THE STATE BANK OF INDIA ACT, 1955 AND OTHER RELEVANT LAWS PROHIBIT DISCLOSING THE NAMES OF INDIVIDUALS WHO OWE MONEY TO BANKS