The Hindu Business Line : Ordinance to amend Securitisation Act issued

It has provided for taking over of management of the business of the defaulting borrower by a lender under Section 13(4). This was omitted in the original Act.

New Delhi , Nov. 17

THE Government has amended the Securitisation Act to provide that defaulting borrowers against whom banks have taken recovery action under the Act would have to deposit at least 50 per cent of the decreed amount upfront if they prefer to appeal to the Debt Recovery Appellate Tribunal (DRAT) against orders of the Debt Recovery Tribunals (DRTs).

The DRT has been given the powers to lower the upfront payment; but in no case can the stipulated payment be less than 25 per cent of the decreed amount.

It has also stipulated that DRTs would have to dispose of cases within four months of any application being filed before it by borrowers whose assets are taken possession of by lenders.

If the DRT fails to take a decision within the stipulated time, a borrower can prefer an appeal to the DRAT for expeditious disposal.

The amendments to Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has done through the promulgation of the Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Ordinance, 2004.

The ordinance also confers power upon the appellate tribunal to transfer all pending applications before different DRTs to one DRT.

It has also provided for taking over of management of the business of the defaulting borrower by a lender under Section 13(4). This was omitted in the original Act.

The Reserve Bank of India (RBI) has also been allowed to call for periodic returns and information from securitisation companies and asset reconstruction companies.

The Government has said that the amendments to the Act have been made to bring the legislation in conformity with the judgement of the Supreme Court.

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