Legalising Defamation of Delinquent Borrowers

Banks in India have been publishing information about defaulting borrowers since early 2013 through regular advertisements in print media, detailing names, addresses and photographs of the defaulting persons. Many of these persons are retail borrowers, students, consumers, homebuyers or owners of small and medium enterprises. Other borrowers are companies. Both these categories of borrowers default on their loan obligations quite often. When that happens, the lending banks publish such personal information, along with photographs, in the print media. The State Bank of India and several other banks, in order to make speedy recoveries of their loan amounts, have used this practice to exert social pressure on defaulters. At least one bank official has claimed that this method is indeed effective in accelerating recoveries from defaulters.¹

However, as is apparent, this practice has been criticised to be prima facie an act of defamation against the borrower by the banks, and the right of banks to adopt any method for the recovery of its dues, including the publication of the photograph of the defaulter has come directly into conflict with the right to privacy and dignity of the borrower, which has now come to be recognised, to some extent, as part of the right to life guaranteed under Article 21 of the Constitution. But the government, the Reserve Bank of India (RBI) and several courts have not raised any objections in this matter, whereas some others have.² This case commentary discusses the reasonableness of the positions taken by different high courts regarding this practice that is a rising trend.