A three-judge bench headed by Chief Justice M M Punchhi issued notice to the respondents on a petition by Common Cause through its president H D Shourie which alleged that NPAs have "accumulated to an astounding figure of Rs 43,577 crore."

"This amount, with the inclusion of appropriate interest accrued thereon, would be four to five times of the original figure comprising the non-recovered loans which to a large extent have become irrecoverable," Shourie said.

Criticising the attempts made both by the finance ministry and the RBI, Shourie said this enormous accumulation of NPAs was stated to have been caused by the policy adopted by them to encourage the banks to liberally advance loans to the "needy andweaker" sections which were renamed as priority sections.

The petitioner alleged that after earmarking credit to the extent of 50 per cent for the government securities, 40 per cent was directed to be advanced to the weaker section and the balance was to be used for assisting medium and large industries and wholesale trade.

It was further alleged in the petition that attempts were continued to be made by the ministry of finance and the RBI to play down the figure. This enormous accumulation of NPAs has taken place because of the 1980 policy of the government and the RBI to encourage banks to liberally advance loans to the needy and weaker sections, the petition said.

The petition urged the court to direct the union of India and the RBI to frame rules and regulations for the speedy recovery of loans and interests thereon. The petition also prayed for the setting up of a fraud detecting mechanism to save banks from undergoing huge losses. "These non-recovered loans," the petition said, "had been given theeuphemitic appellation of "non performing assets".