Debt Recovery Bill to be taken up - Fusion - WeRIndia

At present, the debt recovery is very difficult in the country. This is due to the weakness of the present debt recovery bills. This leads to difficulty in conducting business. Central government is focused on this issue. In order to simplify the business, the government is aimed to strengthen the debt recovery. In this regard, the government planned to amend the bill in the Lok Sabha today.

The Bill was earlier introduced in the Lok Sabha in May seeking to amend four regulations. These include Securitization 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.

Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is also known as Sarfaesi Act. Banks and other financial institutions can auction commercial or residential properties under the provisions of the Act to recover their loans. The Recovery of Debts due to Banks and Financial Institutions Act facilitated to establish the Debt Recovery Tribunals and Debts Recovery Appellate Tribunal. Yet, many cases are pending in these tribunals. Hence government is seeking to make some amendments to this law as well.

As there are increased number of concerns regarding the loan recovery in view of stressed assets to the tune of over Rs.8 lakh crore in the banking system, the government took this decision with the legislation. It scheduled to make amendments in the Lok Sabha today. The regulation proposed to provide powers to RBI in order to control asset reconstruction companies, arrange secured creditors to repay debts. Stamp duty exemption is also provided on loans allotted by banks and financial institutions to asset reconstruction firms.

Over Rs.5 lakh crore are pending in approximately 70,000 cases in Debt Recovery Tribunals. It is anticipated that there will be quick clearance of recovery applications with the proposed amendments in the bill.

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