Parliament Passes Bill For Easier Debt Recovery

"Don't take it as a precedent but for this particular person allow his lawyers to represent. The banks never allow lawyers to come up in a hearing for willful defaulter but what was so special about him," Jaitley said.

The Finance Minister further said there cannot be situation where "the bank manager has to keep awake and you sleep well. This principle needs to be reversed in India".

DRT amendments, he said, are intended to create this new procedure so that recoveries in DRTs become easier.

"It's only when business people who are willful defaulters, when they are asked to vacate their house that they pay," Jaitley said.

With regard to concerns expressed about education loans, the Minister said some compassion has to be shown, but the loan cannot be written off.

Jaitley said education and farm lands have been kept out of the purview of the securitisation.

The law aims at faster recovery of debt by PSU banks, which are grappling with Rs 4 lakh crore of NPAs and Rs 8 lakh of stressed assets. The bill was then referred to the Joint Parliamentary committee.

On education loans, the Finance Minister said there are higher NPAs as far as student loans are concerned, but then these are all areas where banks are supporting students to get educated.

"It's a responsibility of the students that when they start earning to repay back and I think in case some more time is granted an element of compassion will have to be seen in the context of this factor. But you can't waive-off the loan. Somebody has to pay for that loan...," he added.
(Reopen PAR33)

Earlier, Ravi Prakash Verma (SP) referred to the Mallya case and said there is a tendency developing that big companies avail of loans against their brand value.

He called for proper evaluation of financial assets to recover loans.

"We require such laws where financial market is regulated and debt recovery is facilitated," Verma said.

Harivansh of the JD(U) said corporates houses and "big fish" should be dealt with and "put in the net".

Referring to Kingfisher Airlines, he said Mallya was involved but not the sole offender. He noted that 10,000 employees belonging to the airline had got affected.

T Subbarami Reddy of Congress said he was "very happy" to support the bill as he noted that banks are in a bad shape and in dire need of capital infusion by the government.

He said the amendments will enable non-institutional investors to invest in security receipts by asset reconstruction companies (ARCs).

"The bill aims to strengthen hands of financial authorities to recover money from debtors whom they have given loans making banks strong," Reddy said.

He expressed appreciation that RBI has been empowered to regulate asset reconstruction companies (ARCs).

The government should have a mechanism to see that banks, financial institutions are properly guided to give a helping hand to temporarily sick institutions, he added.

Bhupender Yadav (BJP) termed it as another step of economic reforms by the government to facilitate ease of doing business.

He said the legislation will bring transparency and create an atmosphere of accountability.

A Navaneethakrishnan (AIADMK) said the Bill has very good provisions to recover debt.

However, referring to the case of a student named Lenin belonging to Tamil Nadu who committed suicide, he alleged ARCs were taking coercive steps to recover loans.

Navaneetha Krishnan said that depending upon the quantum of loan amount defaulted, there should be applicability of SARFAESI, pointing out that the harsh provisions under the legislation cannot be applicable to loans below Rs 1 crore, or loans extended to the education and SME sector.

"Central Government must bring an amendment that SARFAESI Act will not be made applicable to education and SME loans," he said, arguing that small borrowers must be kept out of the purview of the Act.

Vivek Gupta of Trinamool Congress said the government should think how much power is given to the banks, alleging that lenders directly go to guarantors leaving the loanees out.

He said the Debt Recovery Tribunals (DRTs) should be increased and their vacancies filled.

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