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The Right to Information Act, 2005, contains several exemptions which enable public authorities to deny requests for information. RTI Annual Return Reports for 2005-2010 give detailed information on use of these exemptions to reject RTI requests. Exemptions to requests for information under the Act are primarily embodied in three sections – section 8, section 11, and section 24. Section 8 lists nine specific exemptions ranging from sovereignty of India to trade secrets. Sec 11 provides protection to confidential third party information. Sec 24 exempts certain security and intelligence organizations from the purview of the Act. Of these, sections 8(1)(j), 8(1)(d) and 8(1)(e) are respectively the three most frequently invoked exemptions for the period 2005-2010, cumulatively amounting to almost three-fourths of all exemptions invoked. Section 8(1)(j) provides protection to personal information of individuals from disclosure in the absence of larger public interest. This exemption was invoked over 30,000 times during 2005-2010, which amounts to almost 40% of all invocations of exemptions. Among ministries, the Finance Ministry has invoked this sub-section the most, followed by the Ministry of Communications and Information Technology. Section 8(1)(d) provides protection to trade secrets and intellectual property from disclosure in the absence of larger public interest. This exemption was invoked almost 15,000 times during 2005-2010, which constitutes 18% of all invocations of exemptions. As with sec 8(1)(j), the Finance Ministry has utilized this exemption the most, followed by the Ministry of Petroleum and Natural Gas. Section 8(1)(e) provides protection to information available to a person in his fiduciary relationship from disclosure in the absence of larger public interest. This exemption was invoked 11,639 times during 2005-2010, which accounts for almost 15% of all invocations of exemptions. The Finance Ministry has invoked this exemption more than any other ministry, both overall and for each individual year during 2005-2010. The Finance Ministry accounts for more than 50% of all invocations of this exemption, having invoked it over 6000 times. The Ministry of Petroleum and Natural Gas is second, with a little over 1000 invocations of this exemption. Ministry-wise Rejections As discussed above, Finance Ministry has a large number of rejections, perhaps because of the larger number of requests that it receives. It is also possible that the Finance Ministry receives a larger number of requests related to private and confidential information (such as Income Tax returns) as well as those which are held in a fiduciary capacity (such as details of accounts in nationalised banks). Adjusted for the number of requests received, the Finance Ministry tops the rejection rate at 24%, followed by the Prime Minister's Office (12%) and the Ministry of Petroleum and Natural Gas (11%).
At noon today, the Finance Minister introduced a Bill in Parliament to address the issue of delayed debt recovery. The Bill amends four laws including the SARFAESI Act and the DRT Act, which are primarily used for recovery of outstanding loans. In this context, we examine the rise in NPAs in India and ways in which this may be dealt with.
I. An overview of Non-Performing Assets in India
Banks give loans and advances to borrowers which may be categorised as: (i) standard asset (any loan which has not defaulted in repayment) or (ii) non-performing asset (NPA), based on their performance. NPAs are loans and advances given by banks, on which the borrower has ceased to pay interest and principal repayments. 
In recent years, the gross NPAs of banks have increased from 2.3% of total loans in 2008 to 4.3% in 2015 (see Figure 1 alongside*). The increase in NPAs may be due to various reasons, including slow growth in domestic market and drop in prices of commodities in the global markets. In addition, exports of products such as steel, textiles, leather and gems have slowed down.[i] The increase in NPAs affects the credit market in the country. This is due to the impact that non-repayment of loans has on the cash flow of banks and the availability of funds with them.[ii] Additionally, a rising trend in NPAs may also make banks unwilling to lend. This could be because there are lesser chances of debt recovery due to prevailing market conditions.[iii] For example, banks may be unwilling to lend to the steel sector if companies in this sector are making losses and defaulting on current loans. There are various legislative mechanisms available with banks for debt recovery. These include: (i) Recovery of Debt Due to Banks and Financial Institutions Act, 1993 (DRT Act) and (ii) Securitisation and Reconstruction of Financial Assets and Security Interest Act, 2002 (SARFAESI Act). The Debt Recovery Tribunals established under DRT Act allow banks to recover outstanding loans. The SARFAESI Act allows a secured creditor to enforce his security interest without the intervention of courts or tribunals. In addition to these, there are voluntary mechanisms such as Corporate Debt Restructuring and Strategic Debt Restructuring, which These mechanisms allow banks to collectively restructure debt of borrowers (which includes changing repayment schedule of loans) and take over the management of a company.
II. Challenges and recommendations for reform
In recent years, several committees have given recommendations on NPAs. We discuss these below.
Action against defaulters: Wilful default refers to a situation where a borrower defaults on the repayment of a loan, despite having adequate resources. As of December 2015, the public sector banks had 7,686 wilful defaulters, which accounted for Rs 66,000 crore of outstanding loans.[iv] The Standing Committee of Finance, in February 2016, observed that 21% of the total NPAs of banks were from wilful defaulters. It recommended that the names of top 30 wilful defaulters of every bank be made public. It noted that making such information publicly available would act as a deterrent for others.
Asset Reconstruction Companies (ARCs): ARCs purchase stressed assets from banks, and try to recover them. The ARCs buy NPAs from banks at a discount and try to recover the money. The Standing Committee observed that the prolonged slowdown in the economy had made it difficult for ARCs to absorb NPAs. Therefore, it recommended that the RBI should allow banks to absorb their written-off assets in a staggered manner. This would help them in gradually restoring their balance sheets to normal health.
Improved recovery: The process of recovering outstanding loans is time consuming. This includes time taken to resolve insolvency, which is a situation where a borrower is unable to repay his outstanding debt. The inability to resolve insolvency is one of the factors that impacts NPAS, the credit market, and affects the flow of money in the country.[v] As of 2015, it took over four years to resolve insolvency in India. This was higher than other countries such as the UK (1 year) and USA (1.5 years). The Insolvency and Bankruptcy Code seeks to address this situation. The Code, which was passed by Lok Sabha on May 5, 2016, is currently pending in Rajya Sabha. It provides a 180-day period to resolve insolvency (which includes change in repayment schedule of loans to recover outstanding loans.) If insolvency is not resolved within this time period, the company will go in for liquidation of its assets, and the creditors will be repaid from these sale proceeds.
[i] ‘Non-Performing Assets of Financial Institutions’, 27th Report of the Department-related Standing Committee on Finance, http://164.100.47.134/lsscommittee/Finance/16_Finance_27.pdf. [ii] Bankruptcy Law Reforms Committee, November 2015, http://finmin.nic.in/reports/BLRCReportVol1_04112015.pdf. [iii] Volume 2, Economic Survey 2015-16, http://indiabudget.nic.in/es2015-16/echapter-vol2.pdf. [iv] Starred Question No. 17, Rajya Sabha, Answered on April 26, Ministry of Finance. [v] Report of the Bankruptcy Law Reforms Committee, Ministry of Finance, November 2015, http://finmin.nic.in/reports/BLRCReportVol1_04112015.pdf. *Source: ‘Non-Performing Assets of Financial Institutions’, 27th Report of the Department-related Standing Committee on Finance, http://164.100.47.134/lsscommittee/Finance/16_Finance_27.pdf; PRS.
