Salve makes the suggestion
New Delhi: The Supreme Court on Thursday asked the Government to consider setting up an independent body on the lines of the Central Vigilance Commission (CVC) to investigate and prosecute cases relating to frauds in banks and other commercial institutions.
A Bench, comprising Chief Justice Y.K. Sabharwal, Justice C.K. Thakker and Justice R.V. Raveendran, gave this direction while hearing a public interest litigation petition filed by "Common Cause," highlighting the "failure" of the Government to take steps to recover nearly one lakh crore rupees of Non Performing Assets (NPAs).
Appearing for Reserve Bank of India, senior counsel Harish Salve said the slow pace of the criminal justice delivery system was hampering the proper investigation of bank frauds.
He suggested creation of an independent mechanism insulated from Government control to investigate bank frauds on the lines of the CVC. He also suggested creation of "commercial courts" to deal with such cases.
The Bench accepted the suggestion and asked Additional Solicitor General Amarendra Saran to give the Government's response in two weeks.
Counsel Prashant Bhushan submitted that bank officials, in connivance with defaulters, deliberately did not declare the amount of loan as NPA and the defaulters continued to enjoy at the cost of public money without incurring any liability to repay the loan.
He said that the defaulters were given loans in the guise of refinance.
In its affidavit, the Centre explained the steps taken for reducing the NPAs.
It said that since January 2005, about Rs. 6,376 crore of NPA had been recovered by the public sector banks.
It said, "better management of the NPAs by the public sector banks is evident from the fact that despite the doubling of outstanding gross advances from Rs. 5.09 lakh crore to Rs. 11.36 lakh crore between March 2002 and March 2006, there has been a substantial reduction in fresh accretion of NPAs."