The Supreme Court has refused to intervene in the executive domain on the issue of growing non-performing assets with the banks and other financial institutions, saying it was a matter to be dealt only by the government.
Disposing of a pending PIL, filed by NGO, Common Cause on NPA issue, a bench of Justices J.M. Panchal and A.K. Patnaik said the matter was beyond the jurisdiction of the court and should be left to the executive and the legislature to take a policy decision on the issue.
The apex court said that the Reserve Bank of India has been issuing guidelines form time to time to deal with the problem and had even appointed a committee to look into the matter, hence the court was hopeful that the RBI governor and the panel appointed by him would suggest further measures to improve the recovery of bad debts.
While pointing out that the legislature had put in place certain laws to deal with the problem, the top court said, still the government on its part would take further steps to make the office of the “serious fraud investigation officer” a statutory body by getting approval from the legislature to ensure that the accused, who had obtained loan from banks and financial institutions by playing fraud, were dealt with sternly.
“Whether such laws are implemented effectively is for the legislature and the Central government to decide and courts can’t interfere in their functioning,” the bench said.
Common Cause had filed the PIL when the total accumulated NPAs with the nationalised banks and other financial institutions had gone beyond the Rs 1,20,000 crores in the wake of the opening of the economy.
The RBI earlier this year had mandated banks to attain a 70 per cent loan loss coverage ratio by September 2010.
Finance minister Pranab Mukherjee, only two months back, had expressed serious concerns over the rising levels of NPA and said this can lead to quasi-fiscal liabilities.