The Finance Ministry is quite confident that the latest changes to the SARFAESI and other debt recovery laws would support banks and financial institutions in taking recovery actions, speed up NPA resolution and improve the quality of assets in the banking system.
While cautioning that the latest legislative changes should not be seen as a “magic wand” or “doing wonders” overnight to resolving banking industry’s problems, the Ministry feels it would definitely facilitate improvements to the recovery regime.
Amendments notifiedThe Centre has now notified the amendments to the SARFAESI and Recovery of Debts Due to Banks and Financial Institutions Acts (RDDB) and made them “more responsive to the demands of present day banking.
The latest changes have rationalised provisions to rebalance the interests of borrowers and lenders, while providing the latter with sufficient legislative support for speedier resolution of defaulted loans, a senior Finance Ministry official said.
“There is no point in making strong statement that everything is wonderful or a strong statement that everything is bad. Because it is neither. We are watching a lot of progress in moving towards a better regime and better set of financials. Things can’t happen overnight and it takes time to resolve issues,” the official said when asked if latest legislative changes would bring dramatic improvements to asset quality situation.
The latest legislative changes will simplify the resolution process and enable debt recovery tribunals to move things “little faster”, the official added.
Banks’ role“Banks are commercial organisations and board-run institutions. We do not interfere in their commercial practices. Recovery is part of banking business. We have done from our side as to what is required. to provide greater legislative and institutional support to their recovery efforts,” the official said.