SC seeks Centre's response on issues with regard to bad loans

The Supreme Court today sought response from the Centre on issues framed by an NGO on matters like defaulted loans, their recoveries and restructuring by PSU banks, saying that the present system is not "perfect".
"Tell us about mechanism for recovering the dues. There may be some mechanism to deal with it. There is also a need of amendments. Suggest the ways and means by which these things can be prevented," a bench comprising Chief Justice T S Thakur and Justices R Banimathi and U U Lalit said.
"We are trying to highlight the issues as there is something not working. If your system would have been perfect then things would not have happened," it said while referring to the huge amount of bad loans.

The observations came when Prashant Bhushan, appearing for NGO 'Centre for Public Interest Litigation', referred to the issues to be considered by the court. The issues were framed by him in pursuance of an earlier order.
Bhushan, in his suggestions, said, "Whether, in view of the judgment ..., RBI can refuse to disclose information about defaulted loans, suits filed for recovery of loans, restructured loans, debts written off, wilful defaulters, One-Time-Settlement, sales of assets of companies to Asset Reconstruction Companies etc.?"
He also framed the issue as to what mechanisms are required to ensure that banks obtain "adequate security for the loans that they give to the companies/corporates?"

One of the issues reads, "Whether the personal guarantees of the promoters should be required to be taken in loans given to the corporates?"

Solicitor General Ranjit Kumar, appearing for the Centre, sought time to respond to the issues framed by Bhushan and said, "we would also like to frame our own issues."
He also said that the Centre is in the process of amending laws to safeguard banks against write offs and NPAs.
The bench, during the hearing, also suggested to Centre to consider setting up of a committee of experts which would go into the entire gamut of issues and said that it is not an "expert".

Earlier, the apex court had favoured making public the
total amount of outstanding loans given by banks to various individuals and entities and running into lakhs of crores of rupees as per the information provided to it by RBI in a sealed cover.
"This information does make out a case. This is quite a substantial amount which is involved," it had said.
However, this was opposed by the Reserve Bank of India (RBI) which said there was a confidentiality clause and the figure will have its own impact if it is disclosed.
The bench, which expanded the scope of the PIL, had impleaded Ministry of Finance and Indian Bank's Association as parties.

The petition, which was filed in 2003 by NGO CPIL, had originally raised the issue of loans advanced to some companies by state-owned Housing and Urban Development Corporation (HUDCO). The plea had said that about Rs 40,000 crore of corporate debt was written off in 2015.
Earlier, the Supreme Court had directed the RBI to provide a list of companies which are defaulters of bank loans of over Rs 500 crore while expressing serious concern over the rise in bad loans.
The apex court had also asked the RBI to provide within six weeks the list of companies whose loans have been restructured under corporate debt restructuring schemes.

The bench had expressed surprise that no concrete steps were taken for the recovery of loan from the defaulters.
While passing the order, the court had taken note of a report in a national daily about bad loans or non-performing assets (NPA) and the inability of the banks to recover them.