HC calls for CBI report on banks role in creating NPA

HC calls for CBI report on banks role in creating NPA
PTI & ENS ECONOMIC BUREAU

NEW DELHI/MUMBAI, MAR 4: The Delhi High Court has sought a status report from the CBI on an investigation into the alleged role of some public sector bank officials in creating non-performing assets (NPA) worth Rs 51 crore in the country.

While directing the agency to place before it a status report by April 16, a division bench comprising Justice Usha Mehra and Justice RS Sodhi also asked the Centre and RBI to place on record a petition pending before the Supreme Court on the issue.

The bench sought the contents of the petition before the Apex Court, after the government and RBI counsel said that the issues raised in the two writs were identical. However, this was countered by Virender Bandhu, counsel for an NGO, which has filed a criminal writ in the High Court, saying the issues in the two writs were different.

Seeking a probe into the alleged role of bank officials in advancing huge amounts as loans to private parties without adequate security, the NGO, Social Reforms Welfare Association (SRWA) said bank officials cannot escape liabilities for “misappropriation” of thousands of crore of rupees when they are supposed to protect the public interests. The court has issued notices to Union Finance Ministry, RBI and CBI last year seeking their response.

The SRWA counsel asked the court to monitor the CBI probe into the matter and said officials found guilty should be chargesheeted within a specified period of time. The petitioner said despite India being a developing country, banks here had the dubious distinction of topping the list of creating NPAs in the world by advancing loans as high as 23.6 per cent, while loans by banks in the US, Japan, Korea, Mexico and Malaysia never have gone beyond the 10 per cent limit.

The TT Pannir committee, set up by the government in 1997 to assess the NPAs, in its report has stated that after opening of the economy, there has been a considerable increase in such assets, the petition said.

While NPAs in 1992-93 were to the tune of Rs 39,746 crore, they rose to Rs 43,577 crore in 1996-97 and were estimated to be at Rs 51,000 during 1998-99, the petition said. However, a recent Reserve Bank of India’s ‘Report on Trend and Progress of Banking in India for 1999-2000’ has said that the gross NPAs of public sector banks alone have increased from Rs 51,710 crore in 1998-99 to Rs 53,294 crore in 1999-2000, while net NPAs increased to Rs 26,188 crore from Rs 24,211 crore in 1998-99.

Interestingly, the real NPA figure should be much higher than Rs 60,841 crore since this figure captures only the NPAs of the scheduled commercial banks and does not include the sticky loans of three financial institutions. Big bull Harshad Mehta’s sticky account to State Bank of India amounting Rs 812 crore since November 1992 continues to remain as the most heavyweight NPA in the industry. Most of the business groups like the UB, the Parasrampurias, the DCM group, the Modis and the Singhanias figure in the NPA list.

The SRWA said since nationalised banks are not free to advance loans without complying with the norms and guidelines laid down by the RBI, any loan given by them against insufficient security, should be treated as misappropriation of funds.“Such plundering of public money and national wealth instead of being checked, in fact is being used as a conduit to pass off the liability of funds without meeting the statutory provisions of law,” the petitioner said. Giving details about some companies and individuals, to whom the banks have advanced loans and have never been recovered, the petitioner’s counsel said appropriate action under the law should be taken against the officials of those banks.