Govt may use SFIO for bad loan recovery

A day after the Supreme Court suggested that SFIO could help banks in recovering bad loans,the Government today said it would look into the possibility of engaging the corporate fraud....

Written by Press Trust Of India | New Delhi | Published:August 20, 2010 1:24 am

A day after the Supreme Court suggested that SFIO could help banks in recovering bad loans,the Government today said it would look into the possibility of engaging the corporate fraud probing body to deal with the menace of non-performing assets. “There is no problem. If Supreme Court gives a specific instruction,then SFIO can do it… Let’s see how things go,” Corporate Affairs Secretary R Bandyopadhyay said. He was responding to a query whether the Ministry would study the SC suggestion of roping in the SFIO for recovering bad loans from companies. The Serious Fraud Investigation Office (SFIO) is under the administrative control of the Corporate Affairs Ministry,and is being readied to become an investigation body at par with the CBI and the Enforcement Directorate. The SFIO has the mandate of taking up investigations that relate to company law violations.

On Wednesday,a bench comprising Justice J M Panchal and Justice A K Patnaik suggested involving SFIO for NPA recovery while disposing of a 12-year-old PIL filed by city-based NGO Common Cause. The PIL wanted the apex Court to direct the government to take stern action to recover bad loans from private sector companies and take steps to prevent the piling up of NPAs.

The present laws were sufficiently stringent to deal with the issue of rising NPAs,the Supreme Court said,adding that their effective implementation is the government’s area and the court would not interfere with it. “Whether such laws are implemented efficiently and effectively is for the legislature and the Centre to decide and courts cannot interfere with it,” the bench said. It also observed that a committee,headed by a Deputy Governor of the RBI,was already looking into the issue and it will lay out certain plans. According to the government,gross NPAs of the commercial banks amounted to Rs 81,813 crore at on March 31,2010.

To tackle NPAs,the government has enacted laws such as the Recovery of Debts Due to Banks and Financial Institutions Act,1993,(DRT Act) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 (SARFAESI Act). NPAs are assets classified by banks or financial institutions as sub-standard,doubtful or loss asset,in accordance with the directions or guidelines from the RBI. Earlier,in the NPA case,the SC had told the government consider the suggestions of Common Cause. One of these was that the government must make a provision for mandatory filing of affidavits by directors of companies seeking loans,saying if they had been directors in a defaulting company earlier.

Video of the day

For all the latest News Archive News, download Indian Express App

    Live Cricket Scores & Results