State Bank of India (SBI) has again refused to share the names of borrowers who owe Rs100 crore or more, even with its shareholder. Over the past nine years, from FY13-14 up to FY21-22, SBI has written off bad loans of over Rs145,248 crore of big defaulters, while recovering just over 13% from them.
SBI told social activist and shareholder Vivek Velankar, "The Bank is under statutory and regulatory obligations to maintain confidentiality of customer data, hence information sought cannot be disclosed."
The stubborn refusal to share information by SBI and other public sector banks (PSBs) is surprising since they have no problem with confidentiality when it comes to small borrowers. All lenders regularly publish recovery advertisements in the newspapers with personal details and photos of smaller borrowers who have defaulted. The stubborn protection to big borrowers or large defaulters under various pretexts is baffling.
Many people, including Mr Velankar, have filed numerous applications under the Right to Information (RTI) Act with PSBs, to make the names of big defaulters public. But, so far, banks have refused to share names of big defaulters citing 'confidentiality of customer data'. Maybe the confidentiality clause is applicable only for big defaulters and not small borrowers, whose details and photos keep appearing in newspapers along with recovery notices.
However, in 2021, SBI simply refused to share the names of big defaulters with its own shareholder. In a reply, Sham K, assistant general manager for compliance and company secretary of SBI, told Mr Velankar, "As Bank is under statutory and regulatory obligations to maintain confidentiality of customer data, the Bank is not in a position to share the account or customer-specific information." (Read: SBI Takes a U-Turn. Turns Down Shareholder's Demand To Reveal Names of Big Defaulters
He is the same official from SBI who has refused to share the list of big defaulters this year too. Further, Mr Sham K also declined to provide information on loans of Rs1 crore and below written off and recovery by the Bank since 2013.
"The information is not centrally collated and maintained by the Bank," he told Mr Velankar in a written reply.
Mr Velankar, who is also president of Pune-based Sajag Nagrik Manch, says, "Two years ago, SBI had shared names of 225 big defaulters with me as a shareholder. However, after that, the Bank denied divulging the names of big defaulters. Does this mean that SBI's definition of confidentiality of defaulters keeps changing every year? And why keep hidden names of big borrowers who had defaulted and since there is no hope of recovery, the Bank has technically written off the debts?"
He also searched annual reports of SBI for the past nine years. "I found that since FY14, SBI wrote off bad debts worth Rs278,605 crore while recovering just Rs54,205 crore from these defaulters. The Union government has set up National Asset Reconstruction Ltd (NARC) as a bad bank to buy illiquid and high-risk assets (typically non-performing loans-NPLs) held by a bank or a financial institution. However, looking at the huge size of written-off debt by SBI, the government would have to set up another bad bank just for the Bank," he says.
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 followed 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.
All this shows an underhand nexus between the banks and the defaulters as a distinct possibility and merits investigation at the highest level.