Bookmark Bookmark

FM introduces Bill to fast track recovery of bad loans

FM introduces Bill to fast track recovery of bad loans

  • Finance Minister Arun Jaitley has introduced the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Bill, 2016 in the Lok Sabha.
  • This bbill seeks to amend four legislations:
    • The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002.
    • The Recovery of Debts due to Banks and Financial Institutions Act, 1993.
    • The Indian Stamp Act, 1899.
    • The Depositories Act, 1996.
  • The Bill now has been referred to a Joint Committee of Parliament.
  • The Committee will consist of 30 members – 20 from the Lok Sabha and 10 from the Rajya Sabha.
  • Key Points of the Bill:
    • It aims to enable the sponsor of an ARC to hold up to 100 percent stake in the Asset Reconstruction Company and permit non-institutional investors to invest in Securitisation Receipts.
    • It will strengthen Debt Recovery Tribunals (DRTs) and computerised processing of cases to expedite resolution of stressed assets.
    • It will help banks that are facing over ₹8 lakh crore of stressed assets recover bad loans faster.
    • It empowers the Reserve Bank of India to regulate ARCs, give priority to secured creditors in repayment of debts and provide stamp duty exemption on loans taken over from banks and financial institutions.
    • It will facilitate expeditious disposal of recovery applications -noting that cases were pending for many years due to adjournments and prolonged hearings though existing laws provide for a period of 180 days for a disposal of recovery applications
    • It has changed the nomenclature of securitisation and Reconstruction Company to ARC.
    • It has also changed the criteria of sponsor of the ARC as fit and proper as against the current provision that sponsors cannot have stake in these firms.
    • It will enable non-institutional buyers besides qualified institutional buyers for investment in security receipts.
    •  It will seek to integrate records on property rights in various registration systems with the records of the Central registry and set up a Central database of security interest on property rights to provide the exact assets detail of existing and potential creditors.
    • It will provide online filing of applications as well as upload of all rulings for the fast track disposal of cases.
    • It empowers the Debt Recovery Tribunals to issue a summon within 30 days of an application, directing the defendant to disclose the particulars of properties and assets and also pass an interim ex-parte order restraining the defendant from disposing them.
    • The defendant will also be expected to deposit at least 25 per cent of the debt due while filing for an appeal.
Take a quiz on what you read Start Now

You might be interested:

Indian economy projected to grow 7.3% in 2016: UN

Indian economy projected to grow 7.3% in 2016: UN A UN report forecasted about India’s economy to grow by 7.3 in 2016. As per the World Economic Situation and Prospect report, India is exp ...

7 years ago

Mathematics Shortcuts: Progression and Series Part - III

Mathematics Shortcuts: Progression and Series Part - III Greetings Aspirants, First of all, we appreciate your support & positive response on our previous articles. Your appreciation is our succes ...

7 years ago

Computer Awareness Module 4: Different Generations of Computer

Computer Awareness Module 4: Different Generations of Computer The computer has evolved as one of the major developments of this Era. But the computer was invented with a thought that it is just the ...

7 years ago

Vocab Express-7

Vocab Express -7 Dear Aspirants, In the previous articles, we have discussed important words that are frequently asked in SBI Clerk and SSC CGL paper. In case you missed out on them, I would strongly ...

7 years ago

Banking Awareness Capsule 22: What is Central Electronic Registry?

Banking Awareness Capsule 22: What is Central Electronic Registry? Dear Aspirant, In this article we are going to learn about Central Electronic Registry. The security obtained for granting a home loa ...

7 years ago

Daily News Digest, 11th May 2016

Indian Government urges smart cities to establish their SPVs immediately Urban development ministry has urged smart cities to establish their Special Purpose Vehicles (SPVs) immediately. Overall twen ...

7 years ago

Provide your feedback on this article: