New Delhi, Aug 1 (IANS) The Lok Sabha on Monday passed the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, with the government making the case for a banking system without loopholes that otherwise permit bad loans to grow.
Piloted by Finance Minister Arun Jaitley, the bill seeks to amend four laws – the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the Recovery of Debts due to Banks and Financial Institutions Act, 1993; the Indian Stamp Act, 1899; and the Depositories Act, 1996.
The bill was passed by a voice vote after the amendments moved by opposition members were either withdrawn or negated.
“The present law simplifies the procedures by which there will be a quick disposal of claims of banks and financial institutions,” Jaitley said, adding that most suggestions made by a joint committee of parliament on the issue have been accepted by the government.
We cannot have a banking system where people take loans and do not repay.
“If loans are to be waived off, someone has to step in. We should not create a culture that I have taken a loan and I can sleep well and banks should be answerable.
“Write-off will put banking structure into a position where banks are not able to extend loans,” he added.
Replying to queries on the bill from members, the Finance Minister said the new law will empower the Reserve Bank of India (RBI) to examine the statements and any information of asset reconstruction companies related to their business.
“The bill further empowers the RBI to carry out audit and inspection of these companies. The RBI may penalise a company if it fails to comply with any directions issued by the central bank,” officials said.
It says stamp duty will not be charged on transactions undertaken for transfer of financial assets, including loans and collaterals, in favour of asset reconstruction companies.