Govt introduces Debt Bill

The government on Monday introduced a bill in Lok Sabha aimed at discouraging borrowers to postpone repayment of their dues and enable the secured creditor to speedily recover their debts including through security or other measures.

The Enforcement of Security Interest and Recovery of Debt Laws (Amendment) Bill, 2004, introduced by Minister of State for Finance S S Palanimanickam, seeks to replace an ordinance in this regard promulgated on November 11 this year.

The ordinance enables banks or financial institutions to withdraw, with the permission of the debts recovery tribunal, application made to it and, thereafter, take action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

It also stipulates certain restrictions if the secured creditors representing three-fourth in value of the amount outstanding against financial assistance disbursed to the borrower have taken measures to recover their secured debt.

The 2002 Act was enacted to regulate securitisation and reconstruction of financial assets and enforcement of security interest.

It enabled banks and financial institutions to realize long-term assets, manage problems of liquidity, asset liability mis-match and improve recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction.

The Supreme Court while upholding the validity of the Act ruled certain provision as violative of the Constitution. The amended bill takes into account these rulings.