SC asks Finance Ministry to explain NPAs recovery mechanism

The Supreme Court on Tuesday asked the Union Finance Ministry to inform about the mechanism in place for recovery of huge Non-Performing Assets (NPAs).

The apex court also asked the ministry to inform as to what safeguards it is bringing in to curb bad debt.

The court has also asked the Reserve Bank of India (RBI) and Indian Banks Association to respond to the issues being framed in this regard.

Meanwhile, the government told the apex court that some amendments are already in the offing and Bankruptcy Code will soon be in place.

Chief Justice T.S. Thakur observed, "Steps needed to prevent such huge write-off. If you propose committee which can look into all these issues, we'll be okay with it."

"Such huge number of outstanding bad loans shows that something is missing, something is not working. Don't take this as adverse remark. But steps are needed to prevent such huge write-offs. We are not financial experts but the government should be in a position to evolve safeguards to prevent NPAs. If you propose a committee which can go into all these issues, we will be okay with it," he said.

The Supreme Court also observed that if the present system would have been perfect then banks would not have huge outstandings.