I. Scheme for disclosure of information regarding
borrowers of banks and financial institutions
In its circular DBOD No.BC/CIS/47/20.16.002/94 dated April 23, 1994 addressed to scheduled commercial banks and financial institutions (FIs), Reserve Bank of India has advised the details of the scheme, as under:
As announced by the Hon'ble Finance Minister in his Budget Speech on February 28, 1994, in order to alert the banks and FIs and put them on guard against borrowers who have defaulted in their dues to other lending institutions, the Reserve Bank of India was putting in place arrangements for circulating among banks and FIs names of defaulting borrowers above a threshold limit. He further mentioned that the Reserve Bank would also publish a list of defaulting borrowers in cases where suits have been filed by banks and FIs.
2. Accordingly, the Reserve Bank of India has prepared a scheme (vide Annexure) to collect and disseminate information on the defaulters and suit-filed accounts. The salient features of the scheme, as modified further, are as under:
3. In case banks have difficulties in providing the information relating to defaulters of their overseas branches on account of secrecy laws of those countries, banks may refer such cases to us for our consideration.
4. This circular is issued under the powers vested with the Reserve Bank of India by the provisions of Chapter III-A of the Reserve Bank of India Act, 1934.
Disclosure of information regarding defaulters
of banks and financial institutions
II. Collection of information
III. Dissemination of information
(1) List of Defaulters:
(a) Banks and FIs coming under the purview of Chapter III-A of the Reserve Bank of India Act, 1934, will be entitled to receive information on defaulters.
(b) Reserve Bank of India will furnish to the Head Offices of all the eligible institutions the database on defaulters in floppy diskettes.
(c) In due course, online access to the database in the computer system at the Reserve Bank of India will also be available to the authorized officials of the eligible institutions.
(d) Banks and FIs will not make available to any outside agency, without the prior approval of the Reserve Bank of India, information on defaulters received by them from the Reserve Bank of India.
(2) List of suit-filed accounts:
(a) Reserve Bank will publish information on suit-filed accounts in a booklet/CD form annually and also place the same on RBI website, along with a disclaimer.
(b) Updates of the list will be placed on RBI website by the Reserve Bank of India on quarterly basis.
(c) These booklets/CDs will be available to all eligible Institutions, associations of industry and trade, press and the general public.
(d) These booklets/CDs will be appropriately priced.
II. Scheme on collection and dissemination of
information on cases of wilful defaults of
Rs.25 lakh and above
Pursuant to the directions of the Central Vigilance Commission, Reserve Bank of India introduced above scheme in terms of circular DBOD No.BC.DL(W)12/20.16.002(1)/98-99 dated February 20, 1999 addressed to banks and FIs under which it collects and disseminates information from/to them on cases of wilful defaults of Rs.25 lakh and above on a quarterly basis commencing from the quarter April-June 1999. As subsequently advised to the banks and the notified FIs, as per circular DBOD No.DL(W)BC.110/20.16.003/2001-02 dated May 30, 2002, the term 'Wilful defaulter' has been redefined in supersession of earlier definition/illustrations, as follows:
A wilful default would be deemed to have occurred if any of the following events is noted:
The term 'Diversion of funds', referred to at para (b) above, would be construed to include any one of the under noted occurrences:
The term 'Siphoning of funds', referred to at para (c) above, should be construed to occur if any funds borrowed from banks/FIs are utilised for purposes un-related to the operations of the borrower, to the detriment of the financial health of the entity or of the lender. The decision as to whether a particular instance amounts to siphoning of funds would have to be a judgement of the lenders based on objective facts and circumstances of the case.
Availability of list of suit-filed
accounts on RBI Website
Particulars of wilful defaulters against whom suits have been filed are published annually as on March 31 along with the list of suit-filed accounts of Rs.one crore and above in booklet/CD form. As indicated above, the booklet/CD containing suit-filed accounts will be available to all eligible institutions, associations of industry and trade, press and the general public. Accordingly, this list of suit filed accounts as on March 31, which is a priced publication, is also put on RBI website, along with a disclaimer. Further, the list of suit-filed accounts of wilful defaulters is placed on RBI website on quarterly basis.