RBI draft rule on securities by banks, FIs put up for public view

Our Banking Bureau

Mumbai, Aug 3: A draft bill for enforcement of securities by banks and financial institutions prepared by the Reserve Bank of India (RBI) working group, under the chairmanship of RBI executive director MR Umarji, has been put up on Friday for a period of one month inviting views and comments from organisations and interested persons.

The purpose of the bill is to codify and consolidate laws and practices relating to creation of security interest and enforcement thereof by banks and financial institutions without intervention of court, said the text of the bill.

The draft proposal says: “notwithstanding anything in any agreement including security agreement or arrangement or the Transfer of Property Act, 1882 or any other law for the time being in force, where any borrower, who is under liability to secured creditor under the agreement, makes any default in repayment of secured debt or any other installment thereof, then the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to take possession of the secured assets and sell them or take such other steps to recover the secured debt”.