The Lok Sabha 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, passed by voice vote, seeks to amend four laws — Sarfaesi Act, DRT Act, Indian Stamp Act and Depositories Act. Finance Minister Arun Jaitley said the banks must be empowered to take effective legal action against defaulters and the insolvency law, securitisation law and DRT law are steps in that direction. At the same time, he assured the House that banks will take a compassionate view on education loan defaults but there will be no waiver.
The changes in the Sarfaesi Act allow secured creditors to take over a collateral against which a loan had been provided, upon default in repayment. It also provides that the process will have to be completed within 30 days by the district magistrate.
“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.
M Rajamohan Reddy (YSRCP) said the bill will improve the ease of doing business by providing a fast-track mechanism to deal with the bad loans of the bank.
Jagdambika Pal (BJP) expressed the hope that the changes in different Acts would help in reducing the non performing assets (NPAs) in the banking sector which are reported to be over Rs 5 lakh crore.