The Hindu Business Line : Securitisation Act amendment Bill passed by Lok Sabha

IN yet another step to bolster the debt recovery efforts of lenders, the Lok Sabha today passed the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill. The Bill proposes to amend the Securitisation Act by reducing the possibility of defaulters delaying the recovery process through frivolous appeals.

The Bill proposed to make it mandatory for borrowers who prefer an appeal to the Debt Recovery Appellate Tribunal (DRAT), to deposit upfront 50 per cent of the amount decreed by the DRT (Debt Recovery Tribunal). However, the DRT can reduce the upfront payment to 25 per cent.

``Whatever the flaws in the earlier Bill, Government has removed them. With the passage of this Bill, the recovery of debts will improve significantly,'' the Finance Minister, Mr P. Chidambaram, said in his reply to the debate on the Bill.

He said that mere addition of NPAs should not be necessarily seen as something ailing the banking system. ``Industry is growing, manufacturing is growing at a rate of 7-8 per cent, people are investing and so some loans will become bad. To recover them, Government has made this law,'' Mr Chidambaram said.

The Finance Minister said that under the new provisions, the borrower would not have to make any payment at the stage of moving the DRT against the action taken by the bank and financial institutions. However, at the second stage (DRAT), the 50 per cent payment would be triggered off.

It is also being proposed to make it mandatory for DRTs 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.

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

More Stories on : Financial Policy | Securitisation | Non-Performing Assets

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
What price the largesse for Kashmir?

AP: Winter session generates heat on day one itself

Securitisation Act amendment Bill passed by Lok Sabha