Planning to empty temple coffers? Madras HC on State order allowing deposit of surplus temple funds with NBFCs

The Madras High Court on Wednesday agreed to hear a public interest litigation (PIL) petition challenging a Tamil Nadu government order (GO) permitting surplus temple funds to be deposited with two State-controlled non-banking financial companies (NBFCs) [TR Ramesh Vs State of Tamil Nadu]..The petitioner has contended that the temple funds so deposited could be exposed to serious financial risk.A Bench of Justices GR Swaminathan and V Lakshminarayanan orally questioned the State’s decision to allow such temple funds to be placed with the Tamil Nadu Power Finance and Infrastructure Development Corporation Limited (TNPFC) and the Tamil Nadu Transport Development Finance Corporation Limited (TNTDFC).“TANGEDCO is also empty, huh? Then you are planning to empty the temple along with it?” the Bench orally remarked during the hearing..The petition filed by TR Ramesh challenges a Government Order (GO) from February 17, 2026, by which the then-DMK-led State government amended the Religious Institutions (Custody, Investments and Lending or Borrowing of Moneys) Rules, 1963. The amendment permits surplus temple funds to be invested in TNPFC and TNTDFC, both State-controlled deposit-taking NBFCs..The petition states that the amendment violates Section 116 of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959. The petitioner has argued that the rule-making power under the Act is limited to carrying out its purposes, namely protection and administration of temple properties. By directing investments into specified government NBFCs, the State has converted temple funds into a source of government financing, the petitioner says.The plea also states that the amendment contains no safeguards relating to credit rating, depositor protection or risk assessment. It has been challenged as arbitrary and violative of Articles 14, 25 and 26 of the Constitution.As per the petition, TNPFC carries only a BBB(-) rating and its statutory auditors have flagged several irregularities. These include misclassification of temple deposits as exempt deposits, understatement of public deposits, overstated profits, accounting issues and disputed TDS liabilities exceeding ₹850 crore.The plea also alleges that TNTDFC has a going-concern qualification, complete loan concentration in loss-making State Transport Undertakings, unresolved RBI inspection findings, inadequate provisioning and liquidity concentration risks..An interim application has further sought a direction restraining the State and the HR&CE Commissioner from depositing or renewing funds of Hindu religious institutions in any NBFC or bonds with a rating below AAA..During the hearing today, Senior Advocate Ravi Seshadri appeared for the petitioner and submitted that the two NBFCs were earlier not approved financial institutions for depositing temple funds. He said the petitioner had issued a legal notice on January 19, 2026 pointing out the infirmity, after which the impugned amendment was brought in.The Court then asked why funds should be placed with these NBFCs when scheduled banks and cooperative banks were already available.“Co-operative bank, scheduled district co-operative bank, okay. Why this Tamil Nadu Transport Development Corporation, other Finance Corporation?” the judge asked..The petitioner's counsel also submitted that there was no government guarantee for the deposits. He argued that RBI norms had been violated as well by treating temple deposits as “other deposits” instead of public deposits.According to him, NBFCs can accept public deposits only up to one-and-a-half times their net owned funds. However, the temple deposits were allegedly being classified differently to avoid this limit.The petitioner's counsel also submitted that auditors had objected to the classification and said temple funds should be treated as public deposits. He further told the Court that 92 percent of TNPFC’s deposit portfolio was invested in TANGEDCO..He expressed apprehensions that around ₹2,700 crore worth of deposits was coming up for renewal and urged the Court to restrain the renewal of deposits.The Court, however, said it would hear the matter next week and directed that the concerned officials be informed that the writ petition and interim application would be taken up for final disposal.