The way public sector banks (PSBs) are giving flimsy excuses for denying information under the Right to Information (RTI) Act on bad loans, loan write-off and names of big defaulters, whose defaults are Rs100 crore and more, one could safely say that the public information officers (PIOs) of these PSBs have mastered the art of evasion to a fault. Take for example, Bank of India (BoI), which refused to share any information on loan write-offs over the past eight years by giving an excuse that it would 'disproportionately divert its resources'! Notwithstanding, Pune-based RTI activist Vivek Velankar went on to study BoI's annual reports, which yielded the information in black & white, that the lender wrote off Rs57,275 crore and recovered just 23% or Rs13,560 crore over the past eight years.
Mr Velankar says, "Not many banks are sharing information on loan write-offs and recovery. Some PIOs told me to check the annual reports to know loan write offs and recoveries. However, A Sasikumar, the central PIO of Bank of India, did not even take that much trouble. He simply denied information saying that procurement and compilation of this information would disproportionately divert the bank’s resources. In this case, I am wondering what information the bank would have sent on loan write-offs to the Reserve Bank of India (RBI) under regulatory compliance."
In line with his previous experience with other banks, Mr Velankar did study annual reports of the BoI to find out total loan write-offs and recovery made by the bank over the past eight years.
"Between FY2012-13 to FY2019-20, Bank of India wrote off Rs57,275 crore and recovered just Rs13,560 crore or about 23%. BoI too denied me the information on the names of its big defaulters citing 'competitive position of third parties' and 'unwarranted invasion of privacy of such a third party'! My point is simple, if these are defaulters who have not repaid loans taken from the bank, then why is BoI shielding them under fictitious reasons? Why protect competition position and privacy rights of big defaulters when this is affecting its own balance sheet and financial health?" Mr Velankar, who is also President of Sajag Nagrik Manch, says.
Declining to share information on big defaulters, the chief public information officer (CPIO) of Bank of India told Mr Velankar that "...the information sought is relating to third parties that are exempted under section 8(1)(j) of the RTI Act, the disclosure of which would harm the competitive position of the third parties as well as cause unwarranted invasion of the privacy of such third party and not larger public interest warrants disclosure of such information. Moreover, under section 13 of the Banking Companies (acquisition and transfer of undertakings) Act, bank shall not divulge information or details pertaining to its customers."
This reply from the CPIO is totally wrong on two grounds. One, when it comes to sharing information and if the information is available on record, then no other Act can overturn the RTI Act. This means, the PIO simply cannot use any Act to deny information, which is asked for under the RTI. He needs to use the provision of the RTI Act only if he has genuine reasons for not sharing the information.
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. Recently, 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’.”
Banks are mandated to submit reports to the Reserve Bank of India (RBI) on a periodic basis. These reports include information on non-performing assets (NPAs), loan write offs and recoveries made during that period. So, if Bank of India has submitted its compliance report to the RBI, then it cannot deny the same information to an applicant under the RTI Act.
"When a common borrower defaults, the same bank publishes his name, photo, name of guarantors and all other details related with the loan through advertisements in newspapers. Then why do they want to keep the names of bigger defaulters hidden? Why don’t the 'competitive position' and 'unwarranted invasion of privacy’ clauses apply while publicising the names of the common borrowers?" Mr Velankar asks.
Except the State Bank of India (SBI), every other PSB has declined to share information like names and amounts borrowed by big borrowers which turned into non-performing assets (NPAs). Even in the case of SBI, Mr Velankar could access the list of big defaulters only because he is a shareholder and had asked the question during the annual general meeting (AGM) of the Bank.
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. The beneficiaries are invariably some of our biggest industrialist defaulters.
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.
Such write-offs also debunk the aggressive posturing by the government and policy-makers about their so-called recovery efforts.