Names of defaulters not to be revealed

Finance Minister P Chidambaram today refused to concede to the Left parties' demand that the names of companies that have defaulted on loans be made public.

He said in the coming days, public sector banks were likely to recover more outstanding non-performing assets following amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

Replying to a calling attention motion moved by Communist Party of India leader Gurudas Dasgupta, Chidambaram said 10 top companies owed an amount of Rs 3,908 crore to public sector banks.

He said only names of defaulters against whom legal action had been initiated could be published under the law. Moderation should be exercised in making public the names since it affected the market perception of a company, said the minister.

The finance minister added that every business went through a cycle, like in the case of steel companies for which a debt restructuring plan was worked out.

He said the volume of non-performing assets of public sector banks and the share big borrowers had in it had been a cause for concern for the government. This was because high incidence of defaults would curtail the availability of funds to the banks for effective deployment.

There were various internal and external factors that led to a bank's asset turning into a non-performing one, Chidambaram said. The internal factors basically pertained to deficiency in credit appraisal and supervision, diversion of funds by the borrower, willful default and inefficient management of borrowers, he said.

The external factors were non-viability of a project or sickness of an unit owing to changes in technology, demand pattern and policies, and non-completion of projects because of factors like non-availability of raw materials.

He said the gross volume of non-performing assets which were Rs 56,473 crore in March 2002 came down to Rs 51,538 crore in March 2004. The net volume of non-performing assets decreased from Rs 27,958 crore to Rs 18,860 crore for the same period.

Accordingly, the percentage of net non-performing assets to net advances also came down to 3 per cent from 5.82 per cent during the same period. "This has been made possible by stringent measures adopted by the government and the Reserve Bank of India with the help of the banks concerned," he said.