Column : Debt recovery Bill needs a relook
The Bill aims to achieve a few objectives. It permits asset reconstruction companies and securitisation companies to convert loans of borrower companies into equity shares. It permits banks to purchase immovable assets of borrower companies in lieu of their loan obligations. It includes multi-state cooperative banks within the definition of banks. Currently, banks and financial institutions need to respond to representation from borrowers within seven days; the Bill increases this to 15 days. It enables banks or any person to file a caveat, so that they are heard by the Debt Recovery Tribunal before granting a stay. It enables the central government to require by notification, the registration of all transactions of securitisation or asset reconstruction or security interest, which are subsisting before the creation of the Central Registry. The Bill provides the central government with the power to direct, in public interest, that the provision of the Sarfaesi Act may not apply or may apply with modifications to a class or classes of banks or financial institutions.
The first two proposals listed above may need careful
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