"Collection of large amount by way of capitation fee running into crores of rupees for MBBS and post-graduate seats, exorbitant fee, donation etc, by many of such self- financing institutions, have kept the meritorious financially poor students away from those institutions," it said.
"Pressure, it is also seen, is being extended by various institutions, for the additional intake of students, not always for the benefit of the student community and thereby serve the community, but for their own betterment," a bench of justices K S Radhakrishnan and A K Sikri said.
The court said that quality of education has gone down in private colleges which are turning into students financing institutions. It said that government agencies need to introspect on the issue to bring proper legislation.
"We cannot lose sight of the fact that these things are happening in our country irrespective of the constitutional pronouncements by this court in TMA Pai Foundation case that there shall not be any profiteering or acceptance of capitation fee etc.
"Central Government, Ministry of Health and Family Welfare, Central Bureau of Investigation or the Intelligence Wing have to take effective steps to undo such unethical practices or else self-financing institutions will turn to be students financing institutions," it said.