New Delhi, June 8 (IANS) A parliamentary panel looking into a bill to amend the country’s debt recovery laws has sought comments and suggestions from stakeholders as well as the general public, an official statement said.
The comments/suggestions have been sought by June 22 on the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Bill, 2016, currently being scrutinised by a 30-member Joint Parliamentary Committee (JPC) headed by Rajya Sabha MP Bhupender Yadav, a Union Finance Ministry release said on Tuesday.
The bill seeks to amend four legislations — 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; and the Depositories Act, 1996, to “improve ease of doing business and facilitate investment which will lead to higher economic growth and development”, the statement said.
Finance Minister Arun Jaitley introduced the bill in the Lok Sabha last month in a move to expedite the process of resolving the debt issues burdening creditors, particularly at a time when state-run banks are severely stressed by bad loans and have posted record losses in the last quarter on account of provisioning for the same.
The bill has been referred to the JPC, which includes 20 members from the Lok Sabha and 10 from the Rajya Sabha.
Jaitley had in the 2016-17 Budget presented in February proposed to amend the Sarfaesi Act to enable the sponsor of an asset reconstruction company (ARC) to hold up to 100 per cent stake in the ARC and permit non-institutional investors to invest in Securitisation Receipts.
The legislation proposes to give Reserve Bank of India the powers to regulate ARCs, prioritise secured creditors in repayment of debts and provide stamp duty exemption on loans assigned by banks and financial institutions to asset reconstruction firms.
Jaitley had also announced strengthening the Debt Recovery Tribunals (DRTs) and computerised processing of cases to speed up the resolution of non-performing assets (NPAs) or stressed loans.
Around 70,000 cases are pending in DRTs.
The bill empowers the tribunals to issue summonses within 30 days of an application, directing the defendant to disclose 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.
Amendments proposed with respect to Sarfaesi Act, 2002, include specific timeline for taking possession of secured assets, debenture trustees as secured creditors, as well as integration of “registration systems under different laws relating to property rights with the Central Registry so as to create a central database of security interest on property rights”.
Gross NPAs of public sector banks rose from Rs.267,065 crore in March 2015 to Rs.361,731 crore in December.
As a proportion, they increased from 5.43 per cent of advances in March 2015 to 7.3 per cent as in December-end.