Reserve Bank of India (RBI) Governor Raghuram Rajan said on Tuesday that it was not proper to make the names of all defaulters public as it would hurt the risk-taking ability of entrepreneurs.
Dr. Rajan said only wilful defaulters’ names should be made public.
“Sometimes, you default on credit card bill. Do you want to your name to be put out in public?” Dr. Rajan asked during a post-policy interaction with the media.
“What we are saying is that the act of default happens in business. Sometimes because not of your own fault,” he said.
Earlier, the central bank submitted a list of names of large defaulters to the Supreme Court in a sealed cover but requested it not to make it public.
“We believe, simply any act of default, without understanding the severity, if it just put out for the public to consume, it could create both loss of business as well as undue anxiety and panic and therefore chill business activity. If you are a promoter why will you take risk if there is a slightest chance of default and your name is put up in public for shame. I don’t think we wanted that kind of move, that was our plea to the Supreme Court for keeping this confidential,” the governor said. But he justified why the names of wilful defaulters should be made public.
“We have no problem if the intent is to publish wilful defaulters list. That is where the promoter has, in the eyes of the bank, taken it for granted. The bank has gone through a legitimate process of declaring the promoter as wilful defaulter. That can be made public. In fact, some courts have prevented banks from making that list public,” Dr. Rajan said.