'Govt must consider RBI rules to tackle bank fraud'

New Delhi, Nov 9: The Supreme Court today directed the Central Government to seriously and actively consider suggestions of the Reserve Bank of India (RBI) for setting up independent mechanisms insulated from government control to investigate banking and other related frauds.

The bench comprising Chief Justice Y K Sabharwal and Justices C K Thakker and R V Ravindran, while adjourning the matter for two weeks, accepted the suggestions of senior counsel Harish Salve appearing for the RBI.

The Ministry of Finance in its affidavit has claimed that there has been a considerable decline in the non-performing assets (NPA) by public sector banks.

To buttress its claim, the Finance Ministry has claimed that the percentage of net NPAs has gone down from 5.8 per cent in 2002 (27958 crore) to 1.3 per cent (14560 cr).

According to the government, since the enactment of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), 2002 and its effective enforcement, since January 2005, around Rs 6376 crore has been recovered by public sector banks by issue of 118918 notices under the Act till March 2006.

The RBI has also suggested the setting up of banking fraud cells and a separate directorate of prosecution to tackle the issue of bank fraud.

The gross advances in the year 2002 made by the public sector banks stood at 59368 crore and in the year 2006, the gross advances have more than doubled and stood at Rs 113556 crore.

The directions came on a PIL filed by Common Cause. Mr Prashant Bhushan appeared for the petitioner.

UNI