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The Supreme Court has adopted a very strict stance regarding the country’s banking system and the use of public money. The Supreme Court has said that in many cases there appears to be a deep nexus (Nest of Collusion) between banks, Asset Reconstruction Companies (ARC) and big borrowers. The court warned in clear words that the money deposited with banks is the hard-earned money of the public and taxpayers. Therefore, banks will have to make very serious efforts to recover the loan after giving it. Non-refunding of loan amounts and lax action against defaulters will not be accepted at any cost.
What is this whole matter of Rs 1,537 crore?
A bench of Chief Justice (CJI) Surya Kant and Justice V. Mohana, hearing the case, said that the court is only concerned about the misuse of public money, which should actually have been spent for the welfare of the country and the public.
The Supreme Court made this scathing comment on a PIL in which it has been alleged that the Public Sector Banks (PSU Banks) Outstanding loan of Rs 1,537 crore Through two ARCs Settled at a nominal loss of only Rs 73.50 crore. It has been done. In view of this serious financial misappropriation, the Supreme Court has issued a notice to the Central Government, Reserve Bank of India (RBI) and other concerned departments and sought their response within four weeks.
‘This is just the tip of the iceberg’ – lawyers’ anger in the court
During the hearing, the bench expressed deep dissatisfaction over the current methods of disposal of stressed assets (NPAs). The bench acknowledged that though it understands the limitations of interfering in the commercial decisions of banks, it cannot turn a blind eye where the public exchequer is directly being defrauded.
Senior advocate Ashwini Kumar Upadhyay, appearing for the petitioners, told the court that a huge amount of loan amount in the country is being transferred to ARC companies at huge discounts, causing huge loss to the country’s revenue. Upadhyay stressed, “This is not an isolated case. This is just a small tip of the iceberg of a bigger game going on in the banking sector.”
Demand for high-level judicial commission and CBI investigation
The petition, filed through advocate Ashwani Kumar Dubey, directly demands an investigation into the alleged banking scam between ARC companies, public sector banks and a large infrastructure firm based in Noida. The petition seeks directions to the Central Government to:
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To investigate this entire corporate and banking fraud Judicial Commission or Expert Committee should be formed.
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Top officials of Reserve Bank of India (RBI), SEBI, Serious Fraud Investigation Office (SFIO), Enforcement Directorate (ED) and CBI should be included in this committee.
Noida’s infrastructure company’s game of ‘shell companies’
According to the petition, at the center of this entire controversy is a Noida-based infrastructure construction company, which between 2012 and 2015 had acquired almost Rs. Huge loan of Rs 912 crore Had taken.
After this, a detailed forensic audit of this company was conducted in the year 2018. Shocking and strong evidence was found in this audit report, which showed that Amount of more than Rs 902 crore The funds were diverted through shell companies (fake companies), non-existent vendors on paper, undeclared bank accounts and suspicious transactions, flouting the rules. The Supreme Court has now given strict instructions to break this entire nexus and closely examine the working methods of ARC.