- RBI working on new way to make wilful defaulters public, says Governor
- He clarified that RBI wants to protect privacy in case of no wrongdoing
- Cannot club credit card defaulters with serious loan defaulters: Rajan
Reserve Bank of India is working on a new system for making public the list of wilful defaulters, while a new mechanism is being put in place for out-of-court settlement of bad loan-related disputes, Governor Raghuram Rajan said today.
“As a regulator we have no intent or desire to protect malfeasance… We are very happy to make that list public. In fact my people are working on making sure that we can put that list up in an accessible way and also (of) defaulters against who suit has been filed because that is already public information,” he said while delivering a lecture in New Delhi.
However, the central bank was in favour of protecting privacy in cases where there is no wrongdoing, he said, adding a blanket edict that everybody’s name should be made public on the website might not be desirable.
He further said it might not be correct to flash the name of all and sundry, including those who forgot to pay their credit bills.
Such persons, Mr Rajan said, could not be clubbed with serious bank loan defaulters otherwise people might start throwing away their credit cards.
“We have to be weary of killing entrepreneurship in this county by putting all unsuccessful risk taking in the same basket. We need risk taking, we need people to take risk,” he added.
Mr Rajan added the RBI is creating a structure for an out of court settlement of the disputes relating to bad debts. “At RBI, we are creating a structure to help out-of-court resolution and we are still at work, it’s work in progress. We are fine-tuning it, making sure it works,” he said.
Complimenting the government for passing Insolvency and Bankruptcy Code Bill, the RBI Governor said: “So given that fact that we have moved forward at all (On Bankruptcy Bill)… is a credit to the system. Will the Bankruptcy code take time to put in place, I think we can move faster on it.”
Mr Rajan said till recently Indian banks did not have enough power to persuade promoters of companies to pay loans.
“Till recently the threat that banks could make to promoters was meaningless, which is why promoters could go to bankers and say take 25 paise on the rupee, otherwise I will see you in a court for the next 15 years,” he said.