The Finance Ministry has constituted a panel to give more teeth to the debt recovery laws to effectively deal with wilful defaulters and check bad loans which have soared to Rs 2.40 lakh crore, reported PTI.
A panel has been constituted by Department of Financial Services for suggesting changes in the existing laws to make debt recovery more effective, media report said.
The members of the panel entrusted to revisit existing debt recovery laws include Anurag Jain, Joint Secretary Department of Financial Services, Former law Secretary V K Bhasin, representatives of DRT, RBI, IBA and bar associations, media report added.
Besides, panel has been also assigned to draft as new statute with harsh penal provisions for wilful defaulters.
The panel was set up to plug the loopholes in the current legal framework for debt recovery.
According to PTI report, there has been instances of promoters getting rich and companies becoming bankrupt and defaulting on bank loan repayment.
The committee constituted would suggest amendments in Sarfaesi Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act) and RDDB Act (Recovery of Debts Due to Banks and Financial Institutions).
Among other things, the panel would also recommend making penal provisions more stringent in case of wilful defaulters.
Noting that the rising Non Performing Assets (NPAs) of public sector banks is a matter of concern for the government, Finance Minister Arun Jaitley in the Budget speech had announced setting up of six new Debt Recovery Tribunals at Chandigarh, Bengaluru, Ernakulum, Dehradun, Siliguri and Hyderabad.
"Government will work out effective means for revival of other stressed assets," he had said.
There are over 40,000 cases worth Rs 1.73 lakh crore pending before various courts and Debt Recovery Tribunals. In March 2014, the Gross non-performing assets (GNPAs) in banking system gone up 4.4% from 3.8% of the total assets in the previous fiscal.
The Gross NPA of public sector banks jumped by a 39 per cent to Rs 2.16 lakh crore at the end of March 2014 from Rs 1.55 lakh crore in the previous fiscal.
However, Gross NPA in case of private sector bank rose to a 13.76 per cent to Rs 22,744 crore as compared to Rs 19,992 crore at the end of March 2013.
During 2013-14, public sector banks recovered Rs 33,486 crore against the written-off amount of Rs 34,620 crore.
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