The CBDT may share information of assets of borrowers with the banks to prevent loan defaults in public sector banks. For this purpose, on June 25 it issued a directive asking all principal chief commissioners to share information under section 138(1)(b) of the Income-tax Act about individuals with more than Rs 50 lakh of annual income.

"Since the information on assets as contained in the income tax return in specified cases is received by the tax authority.....board is of a view that sharing of information with PSBs in respect of assets held by defaulters of loans, so as to enable recovery of loans from such defaulters, is in public interest and hence, can be furnished," the directive said.

Tax department not only aims to share information of immovable assets of loan defaulters with the public sector banks but also intends to provide "information, such as, details of bank account, sundry debtors of the loan defaulter which may aid recovery of loan by PSB."

However, the information will be given to the banks after an undertaking is received and the information will be given for borrowers, mortgages, and guarantors in the loans with a confidentiality clause and must be used only for the purpose of recovery of loans.

Sources added that in order to ensure that the tax dues against the defaulter (if any) are safeguarded, the CBDT insists on obtaining a no-objection certificate from the jurisdictional commissioner of income tax of the loan defaulter “before appropriation of the… amount recovered from sale of… the asset of the defaulter, the information in respect of which is shared.”