Source TNN, Dec 6, 2010, 01.31am IST:MUMBAI:
The Supreme Court has issued a notice to the Union finance ministry in connection with a PIL saying there have been no guidelines by the ministry and the Reserve Bank of India (RBI) while writing off loans by banks and the debts recovery tribunal (DRT) had failed to recover the debts.
The petitioner, Malad resident Shoaib Richie Sequeira, had initially filed a PIL in the Bombay high court (HC), urging it to take cognisance of the fact that the quantum of public money foregone in write-offs and one-time settlements was left to the discretion of the board of directors of banks and borrowers. This led to largescale loss of public funds, the PIL had pointed out.
The HC had disposed of it on technical grounds. It said that Sequeira had raised the issue in an earlier PIL, which was disposed of by directing him to file an application under the Right to Information (RTI) Act with the finance ministry.
When the ministry, in its reply, said there were no guidelines on the issue, Sequeira filed a second PIL in the HC, bringing the matter to its notice. The HC disposed of the PIL, saying it had not granted liberty to move the court again on the matter while deciding on the first one.
The RBI, finance ministry, law ministry and DRT, in replies to Sequeira's RTI query, said they had no records of the write-offs and one-time settlements between borrowers and banks. The 25 public sector banks that were asked to name big defaulters under the RTI Act also failed to furnish the information.
Sixteen of the banks merely mentioned outstandings, while nine refused to reply. According to information provided under the RTI Act, the banks had written off over Rs 15,000 crore in 2003-2008. The banks argued that furnishing names was not in public interest and was an invasion into the privacy of borrowers.
The DRT, set up for expeditious adjudication and recovery of debts owed to banks and financial institutions, recoverd only 32 per cent of the outstanding amount in 2001-07, the PIL pointed out.
The banks mostly approach the DRT, attach assets under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, or go in for a one-time settlement to recover whatever dues they can.
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