This could be bad news for willful loan defaulters.

P. Chidambaram, then finance minister, had advised public sector banks to form a consortium and take join action against willful defaulters, especially in the cases where the "promoter is prosperous but the company is sick".

In a review meeting on the annual performance of public sector banks and financial institutions for the 2013-14 fiscal, the banks raised concerns that the details of assets as available in wealth tax returns of loan defaulters are not being shared by the Income Tax (I-T) department despite the banks' repeated requests. This issue has been now finally resolved.

According to new directions from Central Board of Direct Taxes (CBDT), the I-T officials would share details of personal assets of corporations that are also in the list of top loan defaulters.

The CBDT has directed to all its principal chief commissioners in a letter that "in view of the fact that every return of wealth filed by the assessee is subject to assessment under Section 16 of the Wealth Tax Act, the information contained therein qualifies for being supplied u/s 42B of the Wealth Tax Act, provided the CCWT/CWT is satisfied that supply of such information to PSBs is in public interest."

By definition, Section 42B of the Wealth Tax Act 1957 states:

"42B disclosure of information respecting assessees: Where a person makes an application to the Chief Commissioner or Commissioner in the prescribed form for any information relating to any assessee in respect of any assessment made under this Act, the Chief Commissioner or Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment only and his decision in this behalf shall be final and shall not be called in question in any court of law."

The CBDT has clarified that "information on assets of loan defaulters to enable recovery of loans by PSBs from such defaulters is in public interest."

It further said, "Such information may be provided in respect of the borrower/mortgager/guarantor of the loan only. At the time of supply of such information a confidentiality clause may be included specifying that such information be used only for the purpose of recovery of loan and will not be shared with any other person/agency. An undertaking to this effect shall be obtained from the Bank (to be signed by an officer not below the rank of the Manager of the Branch concerned) before furnishing the information."

At the same time, CBDT wants to protect its own interests. The board has directed that "in order to ensure that the tax dues of the Department against the defaulter (if any) are safeguarded, an undertaking be obtained from the PSB to obtain a No Objection Certificate (NOC) from the jurisdictional CIT of the loan defaulter before appropriation of the surplus amount recovered from sale of immovable/movable asset of the defaulter, information in respect of which is shared, after adjustment of its loan dues."

CBDT has directed its principal chief commissioners to bring these guidelines to the notice of the chief commissioners, director generals and commissioners of their charges.

Speaking to Indiatoday.in, Arundhati Bhattacharya, chairman and managing director of State Bank of India, said, "It is a welcome step. In many cases, we have personal guarantees. Tracing assets becomes an easier job if details made available to us."

Some months ago, All India Bank Employees' Association released the top 406 defaulters against whom banks have initiated legal actions.

- Kingfisher Airlines (Rs.2,673 crore)

- Winsome Diamond & Jewellery Co (Rs.2,660 crore)

- Electrotherm India (Rs.2,211crore),

- Zoom Developers Pvt. Ltd. (Rs.1,810 crore)

- Strerling Bio Tech (Rs.1,732 crore),

- S. Kumars Nationwide (Rs.1,692 crore),

- Surya Vinayak Industries (Rs.1,446 crore),

- Corporate Ispat Alloys (Rs.1,360 crore),

- Forever Precious Jewellery & Diamonds (Rs.1,254 crore)

- Sterling Oil Resources (Rs.1,197 crore)

- Varun Industries (Rs.1,129 crore)

Releasing the list of 406 bad loan accounts amounting to Rs.70,300 crore, the All India Bank Employees' Association on Tuesday sought amendment to recovery laws and make "willful default" a criminal offence.

AIBEA General Secretary C.H. Venkatachalam said, "There was a four-fold increase in bad loans in four years. From Rs.39,030 crore in March 2008, it rose to Rs.1.64 lakh crore by March 2013."

As per the data of finance ministry, gross non-performing assets of public sector banks have increased and their net profit declined in 2013-14 year-on-year.

Gross NPAs of public sector banks rose from 3.84 per cent as on March 2013 to 4.44 per cent by March 2014. The top 30 public sector banks account for 40.2 per cent of their gross NPAs.