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Home / News / India News / Government to move an amendment bill to strengthen debt recovery
  • India

    Government to move an amendment bill to strengthen debt recovery

    Ramya Patelkhana
    Written by
    Ramya Patelkhana
    Mail
    Last updated on Aug 01, 2016, 10:23 pm
    Government to move an amendment bill to strengthen debt recovery
  • In a bid to strengthen debt recovery laws, Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions Bill, 2016 has been cleared in Lok Sabha through a voice vote.

    It allows collateral possession, except for farm lands, and promises a "compassionate view" on education loans.

    Finance Minister Arun Jaitley said the law facilitates quick disposal of debt recovery tribunal cases.

  • In this article
    Government introduces an amendment bill Bill listed for consideration and passing Act will help banks and taxpayers 70,000 cases pending in Debt Recovery Tribunals Allowing secured creditors' possession over collateral Integrating the records of registered properties Amendments to the RDDBFI Act Further details of the RDDBFI Act's procedures Government to move an amendment bill to strengthen debt recovery
  • Information

    Government introduces an amendment bill

  • In May'16, a bill was introduced in Lok Sabha to amend: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002; Recovery of Debts due to Banks and Financial Institutions (RDDBFI) Act, 1993; Indian Stamp Act, 1899; and Depositories Act, 1996.

  • 31 Jul 2016

    Bill listed for consideration and passing

    Bill listed for consideration and passing
    Credits:
  • The debt recovery amendment bill was listed for consideration and passing, according to the Parliamentary Joint Committee.

    It proposed to grant RBI the powers to prioritize secured creditors in debt repayment, control asset reconstruction companies, and provide stamp duty exemption on loans assigned to asset reconstruction companies.

    Concerns over loan recoveries of over Rs.8 lakh crore of stressed assets in banks were raised earlier.

  • Importance

    Act will help banks and taxpayers

    Act will help banks and taxpayers
  • Santosh Kumar Gangwar, Minister of State for Finance, said 27 PSBs (public sector banks) that constitute 70% of the country's banking sector had written off Rs.59,547 crore as on 31 Mar'16.

    These banks had failed to make recovery from their borrowers, primarily corporate clients.

    If the Bill is passed, it will support banks to strengthen the recovery efforts and save taxpayers' money in turn.

  • Information

    70,000 cases pending in Debt Recovery Tribunals

  • Nearly 70,000 cases involving over Rs.5 lakh crore are reportedly pending in the Debt Recovery Tribunals; the proposed amendment bill would reportedly facilitate prompt disposal of the recovery applications.

  • Collateral Possession

    Allowing secured creditors' possession over collateral

    Allowing secured creditors' possession over collateral
  • SARFAESI Act provides collateral possession by secured creditors in non-repayment of debt cases.

    The district magistrate undertakes the process; tribunals/courts need not intervene.

    The Bill provides the process will have to be finished within 30 days.

    It grants magistrate the power to assist banks to take over a company if the banks convert debt into equity shares and hold 51% stake in the company.

  • Central Registry

    Integrating the records of registered properties

    Integrating the records of registered properties
  • A central registry maintains records of secured assets' transactions under the SARFAESI Act.

    The Bill seeks to integrate records of registered properties under several systems, including Registration Act 1908, Motor Vehicles Act 1988, and Companies Act 2013, with the registry.

    Only possessions over collateral registered with the registry are allowed; creditors would have priority in repayment over others after registration of the security interest.

  • RDDBFI Act

    Amendments to the RDDBFI Act

    Amendments to the RDDBFI Act
  • Debt Recovery Appellate and Debt Recovery Tribunals were established under the RDDBFI Act.

    It requires banks to file cases in tribunals in the area of business or residence of the defendant; the bill allows banks to submit cases in the bank branch's area where debt is pending.

    The Bill allows certain procedures, including parties' presentation of claims and summons issued, in electronic format.

  • Information

    Further details of the RDDBFI Act's procedures

  • The Bill provides further details of the RDDBFI Act's procedures that would be followed by tribunals in proceedings. They include the requirement for applicants to specify the borrower's assets that were collateralized. It also provides time limits for completing some of the procedures.

  • 01 Aug 2016

    Government to move an amendment bill to strengthen debt recovery

    Government to move an amendment bill to strengthen debt recovery
  • In a bid to strengthen debt recovery laws, Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions Bill, 2016 has been cleared in Lok Sabha through a voice vote.

    It allows collateral possession, except for farm lands, and promises a "compassionate view" on education loans.

    Finance Minister Arun Jaitley said the law facilitates quick disposal of debt recovery tribunal cases.

  • Lok Sabha
  • Arun Jaitley
  • RBI
  • Santosh Kumar Gangwar
  •  
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