Parl panel invites public comments on debt recovery laws
The views of stakeholders are being 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 the 30-member Joint Parliamentary Committee headed by Rajya Sabha MP Bhupender Yadav.
The bill, which was introduced in Lok Sabha last month, 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.
The bill aims to improve ease of doing business and facilitate investment leading to higher economic growth and development. “It has been decided by the Joint Committee to seek views and suggestions from various stakeholders and public at large on the provisions of the aforesaid Bill,” a finance Ministry statement said.
The government has come up with this legislation at a time when there is mounting concerns over loan recovery in view of stressed assets to the tune of over Rs 8 lakh crore in the banking system. The legislation proposes to give RBI powers to regulate asset reconstruction companies, prioritise secured creditors in repayment of debts and provide stamp duty exemption on loans assigned by banks and financial institutions to asset reconstruction firms.
Around 70,000 cases are pending in Debt Recovery Tribunals (DRT) and the proposed amendments would facilitate expeditious disposal of recovery applications. Another proposal is to empower the central government to provide for uniform procedural rules for conduct of proceedings in the DRT and Appellate Tribunals.
With respect to Sarfaesi Act, 2002, amendments have been proposed to suit changing credit landscape and augment ease of doing business. These 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”.
Further, the bill seeks to amend the Indian Stamp Act, 1899, so as to exempt assignment of loans in favour of asset reconstruction companies from stamp duty and the Depositories Act, 1996 for facilitating transfer of shares held in pledge or on conversion of debt into shares in favour of banks and financial institutions.