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Reserve Bank's resolute efforts resulted in material decline in NPAs of banking system: RBI to Supreme Court

The resolute efforts made by the Reserve Bank of India to tackle bank frauds and take action against wilful defaulters have resulted in a material reduction of Non-Performing Assets (NPAs) in the banking system, RBI apprised the Supreme Court on Wednesday
09:00 AM Jan 26, 2023 IST | India Legal
reserve bank s resolute efforts resulted in material decline in npas of banking system  rbi to supreme court
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The resolute efforts made by the Reserve Bank of India to tackle bank frauds and take action against wilful defaulters have resulted in a material reduction of Non-Performing Assets (NPAs) in the banking system, RBI apprised the Supreme Court on Wednesday.

In an affidavit filed through Advocate H.S. Parihar, the regulatory authority told the Bench of Justice Sanjay Kishan Kaul, Justice Abhay S. Oka and Justice B.V. Nagarathna that it has been revising its policies from time to time.
RBI further said that it has been taking preventive as well as punitive steps against those responsible for NPAs.
A public interest litigation was filed by NGO Centre for Public Interest Litigation in 2003, seeking directions to curb bank frauds, non-performing assets and the prosecution of wilful defaulters. 
It further sought directions for the banks to comply with stringent circulars issued by RBI and the Central Vigilance Commission on such matters.
Earlier, the Supreme Court had ordered setting up of a committee to look into the matter. The Counsel for the petitioner had then urged the Apex Court to direct the Central government and RBI to follow the recommendations of the committee.
He further pressed for implementation of the recommendation made by the Committee on probe by the Central Bureau of Investigation (CBI) into defaults/ frauds greater than Rs 50 crore.

However, the Apex Court observed that it had to balance the issue of public money and ensure that the ending procedure was not too cumbersome.
The Counsel appearing for RBI pointed out that some of the recommendations, such as setting up of fast-track courts, was beyond its domain.

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The Bench agreed to the point.

Representing the Union government, Solicitor General Tushar Mehta said that ultimately, the bank-customer relationships were fiduciary, adding that separate regimes currently existed to tackle the issue through statutes like the Insolvency and Bankruptcy Code (IBC).
The Apex Court highlighted the increasing use and role of technology in banks and bank scams.
Representing the petitioner, Advocate Prashant Bhushan submitted that the Apex court could pass directions to equip the CBI with personnel trained on these aspects.

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The top court of the country then directed the RBI to file a further affidavit on steps it could take, specifically as a regulator, to implement the Committee’s recommendations, within four weeks. The Bench thereafter listed the matter for hearing after six weeks.

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