The Lok Sabha on Monday passed a crucial Bill that will pave the way for faster resolution of bad loans for banks and provide for swift action against ‘wilful defaulters’.

The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 was passed by voice vote. The proposed law when enacted would amend four laws — Sarfaesi Act, DRT Act, Indian Stamp Act and Depositories Act.

Replying to the discussion on the Bill, Finance Minister Arun Jaitley said that banks must be empowered to take effective legal action against defaulters and the recently enacted insolvency law, the current amendments to securitisation law and DRT law would strengthen the hands of banks in effectively dealing with bad loan recovery cases. The Bill is significant as it comes at a time when the banking system is faced with huge non-performing assets and also in the backdrop of the Vijay Mallya episode. The beleaguered liquor baron, who had left the country to take refuge in the UK, owes ₹9,000 crore to banks.

“The present law simplifies the procedure by which there will be quick disposal of pending cases of banks and financial institutions by the Debt Recovery Tribunal,” Jaitley said.

“We cannot have a banking system where people take loans and do not repay. We should not create a culture that I have taken a loan and I can sleep well and banks should be answerable,” he said.

He said the changes in the four laws are aimed at simplifying the procedure for quick disposal of pending cases.

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