Bankers have demanded several changes in the NPA laws including a minimum deposit of 25 per cent of the outstanding loan amount by the defaulter for contesting a bank's claim over its assets.
Indian Banks Association has already submitted to Finance Minister P Chidambaram, a detailed report on the necessary fine-tuning required in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi).
The government is in the process of examining these proposals and a bill to amend the Act is expected in the winter session of Parliament, official sources said.
"Without a punitive provision, the Sarfaesi Act would not be effective in speeding up recovery of bad assets," a banker said.
There should be a provision that defaulters deposit at least 25 per cent of the outstanding loan amount with a court to contest the banker's claim, they said.
At present, a defaulter need not deposit any amount with a court to contest a bank's claim over its assets.
In its verdict in the Mardia Chemicals vs ICICI Bank case, Supreme Court had done away with a provision in the Sarfaesi Act that made it mandatory for the companies to deposit 75 per cent of the defaulting amount with the court, if they preferred to appeal there against the order for attaching their assets under the Sarfaesi Act.
Although the upholding of the constitutional validity of Sarfaesi Act was welcomed by bankers, they felt that the NPA legislations was diluted after the quashing Section 17 (2) of the Act.
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