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SC terms PSU banks' bad debts 'a big fraud', demands details from RBI

Speed News Desk | Updated on: 14 February 2017, 5:41 IST

The Supreme Court on Tuesday took suo motu cognisance of news reports that public sector banks had written off Rs 1.14 lakh crore as bad loans between 2013 and 2015 and ordered the Reserve Bank of India to provide the court with the names of all the defaulters who owe over Rs 500 crore but continue to lead "lavish lifestyle", reports The Indian Express.

"People are owing thousands of crore to the public banks. it is a big fraud," said a Supreme Court bench led by Chief Justice TS Thakur to Solicitor General Ranjit Kumar. "Top ten public sector banks have written off Rs 40,000 crore alone in 2015. It is all there in this Indian Express report. Public financial institutions are lending money despite knowing no returns. RBI is supposed to keep a watch on these banks. What are you doing about it?"

The Indian Express report had been based on a response to an RTI application. The Supreme Court issued its directive while hearing a PIL filed in 2003 alleging irregularities in the disbursal of loans by the Housing and Urban Development Corporation Limited (HUDCO).

The bench said: "This report is based on RTI. it is not based on the reporter's assumptions. NPA (non-performing assets) declaration is not unknown to any economy but one has to be prudent in advancing loans, and cautious and vigilant in recovering it. Are you happy in keep funding these companies who declare themselves as sick companies and they have lavish lifestyle?"


It added: "Thousands of crore have been written off as bad debts on one day. You must recover that money. From this news report, it looks like a regular phenomenon. Thousands of crores are being written off every year and then you spend more money to recover money. Issue of bad debts is a general issue faced by public sector banks. This is plaguing all financial institutions, especially PSU banks."

First published: 17 February 2016, 7:43 IST