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Court Questions Temple Fund Diversion Order
The Madras High Court is closely reviewing a directive from the Tamil Nadu government that allows surplus funds from temples to be placed with two state-managed Non-Banking Financial Companies (NBFCs). A Public Interest Litigation (PIL) argues that this order puts religious endowments at significant financial risk and goes against the Hindu Religious and Charitable Endowments Act of 1959. The court has shown considerable doubt about the government's reasoning, asking why these specific NBFCs are necessary when traditional banks are available.
Financial Risks at State-Run NBFCs
This government order, set to take effect on February 17, 2026, permits investments in the Tamil Nadu Power Finance and Infrastructure Development Corporation Limited (TNPFC) and the Tamil Nadu Transport Development Finance Corporation Limited (TNTDFC). Petitioners claim this action repurposes temple assets to fund government initiatives, moving away from the core duty of protecting and managing temple properties. Investigations into TNPFC have revealed a low credit rating of BBB(-) and accounting irregularities, including incorrect deposit classifications and large disputed tax liabilities. Meanwhile, TNTDFC faces criticism for concentrating loans within loss-making state transport companies and for inadequate financial provisions. The amendment is criticized for lacking essential elements like credit ratings, depositor protection measures, and formal risk assessments, making the funds vulnerable to misuse and potential violations of religious freedom protections.
Legal Challenge and Court's Questions
Senior Advocate Ravi Seshadri, representing the petitioner, pointed out that these NBFCs were not previously authorized for temple fund investments and that a legal notice was issued before the amendment. The court has asked direct questions about why the government selected these particular NBFCs, especially considering financial concerns surrounding entities like TANGEDCO, suggesting a possible strain on resources. Questions have also been raised about the absence of a government guarantee for these deposits and potential non-compliance with Reserve Bank of India (RBI) guidelines. With about ₹2,700 crore in temple deposits due for renewal, the court has been asked to stop these transactions. The case is scheduled for further hearings. The state's decision to use NBFCs for temple funds, particularly those with known financial weaknesses and limited oversight, marks a significant departure from standard financial management practices for religious trusts. This approach differs from typical regulatory expectations, which generally favor highly regulated and stable financial institutions for such sensitive funds. Given the potential for substantial financial loss and the religious implications, the court's involvement is crucial for ensuring accountability and safeguarding temple assets.