Banks' wilful-defaulters list under SC scrutiny

On a petition by a Nasik-based company, DSL Enterprises Pvt Ltd, the apex court has sought replies from the finance ministry, RBI, Credit Information Bureau India (CIBIL), Bank of Maharashta and Dena Bank as to why they should be allowed to “play havoc with the firm’s social and business standing” by making its name public as a wilful defaulter. The petitioner contended that passing such judgements on the character of a person pre-eminently falls within the domain of the legislature as it involves one’s fundamental right to good reputation and challenged RBI’s giving such powers to itself.

In 2004, RBI authorised CIBIL to publish a list of defaulters of Rs 1 crore and above and also give out details of wilful defaulters of Rs 25 lakh and above against whom suits have been filed. The measure that followed the 2002 scheme that defined ‘wilful defaulters’ and terms like ‘diversion of funds’ and ‘siphoning of funds,’ was aimed at exerting moral pressure on the defaulter.

Under the securitisation ordinance, banks have the right to acquire assets of wilful defaulters. RBI later expanded the definition of wilful defaulters by including companies that try to dispose of mortgaged properties without the knowledge of the lenders. In July this year, RBI issued a master circular combining all its instructions and directions

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