Can’t frame guidelines for NPA reduction, it’s Reserve Bank’s remit: Supreme Court

By: |
October 08, 2021 4:45 AM

As the petitioner in person argued the matter, the Bench asked him "How do we frame guidelines so that non-performing assets do not occur? It's for the legislature to decide and act".

A bench comprising justices DY Chandrachud, Vikram Nath and BV Nagarathna, said that, "it is not possible for the court to tread into policy domain," while refusing to entertain BJP MP Subramanian Swamy’s petition seeking a direction to the government on the issue.A bench comprising justices DY Chandrachud, Vikram Nath and BV Nagarathna, said that, "it is not possible for the court to tread into policy domain," while refusing to entertain BJP MP Subramanian Swamy’s petition seeking a direction to the government on the issue.

The Supreme Court on Thursday refused to frame guidelines on how banks should solve the ever-mounting menace of NPAs, saying it’s a policy issue that falls in the domain of RBI and the government.

A bench comprising justices DY Chandrachud, Vikram Nath and BV Nagarathna, said that, “it is not possible for the court to tread into policy domain,” while refusing to entertain BJP MP Subramanian Swamy’s petition seeking a direction to the government on the issue.

It, however, allowed Swamy to approach the RBI with his suggestions so that the latter can take a considered decision on making any changes in the extant guidelines.

As the petitioner in person argued the matter, the Bench asked him “How do we frame guidelines so that non-performing assets do not occur? It’s for the legislature to decide and act”.

It said that RBI and the finance ministry have been issuing guidelines from time to time to the banking sector and even policies are framed so that NPAs do not occur. “There is no need for us to interfere in all of this,” it said while disposing of the petition.

Swamy, during the hearing, said that his plea dealt with cases and methods by which a large number of NPAs would not occur and the same would be beneficial for everybody. He also suggested the apex court to form an expert committee to look into the issue of framing guidelines.

“We can say ultimately RBI can look at your material and take a decision at the policy level. But constituting a committee, etc, cannot happen,” Justice Chandrachud said.

Swamy said that the banking regulator was maintaining extraordinary secrecy in connection with information on NPAs. When a bank closes down, people run from pillar to post for their funds, he told the Bench.

The petitioner submitted that the apex court had dealt with similar issues earlier and there have been judgements which stated how courts should not have taken a hardline position that it cannot enter the executive’s domain.

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