Naming of all defaulters will kill businesses: Raghuram Rajan

Mumbai: Rejecting calls for naming and shaming of all big defaulters, Reserve Bank Governor Raghuram Rajan on April 5 said it will lead to undue panic and kill business activity.

 "We believe that any act of default without understanding the severity of the issues (that led to the default) and if it is put out for public to consume, it may create both a loss of business as well as an undue anxiety and panic, and therefore, chill business activity," Rajan told reporters at the post-policy conference here.

"I don't think we want that kind of a move. That was our plea to the Supreme Court that please keep the list of names confidential. There are elements that can be disclosed but let us not disclose it now," he said. Rajan, however, was quick to add that the RBI does not have any problem with publishing the names of wilful defaulters because that is where the promoters have, in the eyes of the bank, taken them for a ride.

"In those cases where the bank has gone through a legitimate process to declare the promoters wilful defaulters, can be made public," he said while answering a query on why the central bank does not want to disclose names of the big loan defaulters.

RBI, on March 30, had submitted a list of 150 top loan defaulters who owe banks more than Rs 500 crore in a sealed cover to the Supreme Court with a submission that their names be not disclosed as it may have "adverse impact" for business and may "accentuate failure of businesses".

The court was hearing a 13-year-old public interest litigation by filed by the Centre for Public Litigation on bad loans, and RBI through an RTI reply said public sector banks had written off a whopping Rs 1.14 trillion (Rs 1.14 lakh crore) between 2012-13 and the third quarter of 2015-16.