RBI Governor Raghuram Rajan has advocated on Tuesday that the Supreme Court should keep confidential the list of defaulters that owe Rs 500 crore or more to public sector banks.
Citing the example of credit card default, Dr Rajan said, "Sometimes you default on your credit card bill you just forgot. Would you like the credit card default to be put up in public?"
"Act of default happens in business and sometimes it is not your fault," he said.
The list of big defaulters was submitted by the RBI to the top court last month.
Dr Rajan said promoters can default on bank loans on account of multiple reasons. "I get letter a day saying it is not our fault. Demand is weak, prices are low, there is dumping going by foreign countries, government permissions did not come through...variety of reasons why projects get into trouble."
"Putting up the promoters names for all to see without details of why they defaulted" could hurt the business activity in the country, he added.
"After all if you are a promoter why would you take any risks if slightest chance of default your name is put up in public for shame," Dr Rajan added. "We believe that simply act of default without understanding the severity etc. if it is just put out for the public to consume it may create a both loss of business as well and undue anxiety and panic."
"Sometimes details are hard for lay persons to understand because they are intricate details. Are you going to go into the business of every promoter to understand why they defaulted?" he said.
According to the RBI chief, the central bank has "no problems if the intent is to publish the wilful defaulters list where the promoter in the eyes of the bank has taken the bank for granted. The bank has gone through a legitimate process to declare the promoter a wilful defaulter."
"Some courts have prevented banks from making those list (wilful defaulters) public. If there a judgement along those lines, we don't have any problem," Dr Rajan added.