Mumbai, Oct 29: Banks will soon insert a new clause in all loan agreements by which they will be able to make any default by the borrowers public even if it is not a suit-filed account.

Reserve Bank of India deputy governor SP Talwar on Friday said banks will publicise the name of borrowers who are defaulters in their books irrespective of whether a litigation was taking place. “We have taken legal advice on this account. Banks are inserting this clause in new loan agreements,” Talwar said.

This will enable banks to skirt the secrecy clause in Banking Regulation Act which does not allow banks to reveal the customers’ identity. Until now, the names of the defaulters could be published only if there was a suit filed against them. The RBI published annually the names of all borrowal accounts against which banks and FIs had filed suits for recovery of funds.

The publication listed the name of the company, its address, name of directors and the loan amount due from all such borrowers.

The list also specifies whether the listed company is a defaulter in any other bank.

The existing norms discourage banks from publishing the names of defaulters, which allowed companies of a dubious character to hoodwink other banks into lending them funds.