Mallya Case: Jaitley Asks If Legal System Becomes Hurdle

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In an apparent reference to Vijay Mallya case of loan default, the Finance Minister Arun Jaitley today wondered whether the legal system has become hurdle in the process of loan recovery leading to "escape" of wilful defaulters.

Mallya Case: Jaitley Asks If Legal System Becomes Hurdle

Jaitley stressed that not a single loan was written of by banks and not a single rupee was written off. Explaining the issue of bad loans, he said when an account becomes NPA from standard, the categorisation changes but there is no debt waiver.

"Not a single rupee was waived off. It is only re-provisioning from one category, you go to another category," he said while replying to a debate on Budget in the Lok Sabha. On the issue of wilful defaulters, the Finance Minister said there are legal hurdles in dealing with such borrowers given the existing bankruptcy framework. "You take legal action where recoveries are to be made.

Here I must tell you it's a big challenge to the legal system. The most visible of defaulters who are managing to escape out of the country. "A question we have to ask ourselves...did the legal system act as a hurdle in the recovery? How many cases the banks have had to fight against such people and this is for every institutions now to really look within," he said.

He, however, did not make any direct reference to Mallya who had left India on March 2, presumably for London, days before the Supreme Court heard a plea of clutch of state-owned banks seeking recovery of over Rs 9,000 crore from his group companies.

Jaitley said "wilful defaulters is a pharse under RBI guidelines where a defaulter is declared a wilful defaulter, you are barred from rest of the financial system from taking loan in your name, your companies or any other companies." Such entities cannot raise money from the financial market by misleading people, he said, adding this facility is also denied to wilful defaulters.

In order to deal with this problem, the Finance Minister said that this country desperately need the Bankruptcy and Insolvency Law.

"It is intended to deal with this situation. The earlier we are able to bring it in house...I hope in the second half of the Budget session that gives you the power when the company is sinking to takeover the management so that the incompetent and failed can exit, jobs can be saved and more competent can come in and run the company," he said.

On measures being taken by the government with regard to NPA reduction, the Finance Minister said the first step is that the cleaning of balanceheet.

PTI

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