Bill to amend Sarfaesi Act introduced

NEW DELHI, DEC. 6. In a bid to arm banks with powers to attach properties of defaulters and recover their dues, government today introduced a bill in the Lok Sabha to amend certain provisions of the Sarfaesi Act.

The Sarfaesi Act was upheld by the Supreme Court but ordered dilution of certain penal provisions necessitating government to finetune the legislation meant to speed up recovery of non-performing assets of banks now at Rs. 1,00,000 crores.

The Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Bill, 2004, introduced by the Minister of State for Finance, S. S. Palanimanickam, seeks to replace an ordinance issued on November 11 this year. The bill is aimed at discouraging defaulters to postpone repayment of their dues and enable banks to speedily recover their debts. It also stipulates certain restrictions if the secured creditors representing three-fourths in value of the amount outstanding against financial assistance disbursed to the borrower have taken measures to recover their secured debt.

It enabled banks and financial institutions to realise long-term assets, manage problems of liquidity, asset liability mismatch and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction. — PTI

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