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Mr Arun Jaitley

NEW DELHI, Feb. 26

THE Government today ruled out any further legislative flexibility to the existing securitisation law in the matter of settlement of non-performing assets (NPAs) even as it recognised the validity of industry's suggestion over the need for a distinction between "wilful defaults" and "honest failures".

"The matter of distinction between wilful defaulters and honest failures is a judgement that has to be made by the lenders. It is a commercial decision and it ought not to be prescribed. These distinctions cannot be circumscribed by the legislature. We cannot limit the discretion of the lenders," Mr Arun Jaitley, Union Minister for Law, Justice, Commerce and Industry, said here.

Inaugurating a National Conference on Economic Legislations organised by the Federation of Indian Chambers of Commerce and Industry (FICCI), Mr Jaitley pointed out that "financial institutions and banks have been able to recover only 5 per cent of what they have lent". As against an estimated overall NPA level of Rs 96,000 crore, the actual recovery had been to the extent of Rs 4,000 crore, he said.

The FICCI President, Mr A.C. Muthiah, had raised the issue of making a distinction between wilful defaulters and those who defaulted due to business dynamics beyond their control i.e., unwilful defaulters.

"Although it is difficult to make this distinction quantitatively, there certainly has to be at least recognition of the fact that businesses can often go wrong because of external factors. Hence, there is a need for more flexible approach for settling NPAs," Mr Muthiah said.

On the Competition Act, Mr Jaitley said that as jurisprudence evolved in this area, there would be several grey areas that need to be addressed. "One important area is the question of trans-border jurisdictions. The Competition Commission would have to deal with the issue of impact that the mergers and acquisitions in jurisdictions abroad would have within the country and assess the issues relating to abuse of dominance," Mr Jaitley said.

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