Govt considers changing SARFAESI, DRT; to provide legal weight to e-notices
New Delhi, Mar 20, 2024
The committee headed by an Additional Secretary held several meetings, and discussions are in the advanced stage in this regard, sources told PTI
To speed up the debt recovery process, the Finance Ministry has set up a panel to suggest amendments to the SARFAESI and DRT Acts, including a provision for granting legal sanctity to e-notices to debtors, sources said.
The committee headed by an Additional Secretary held several meetings, and discussions are in the advanced stage in this regard, sources told PTI.
Last month, the Finance Ministry held extensive deliberations with the top brass of banks and Debt Recovery Tribunals (DRTs) to enhance the efficacy of DRTs for expeditious recovery of debts.
"We have formed a committee led by the Additional Secretary to decide on relevant amendments. The aim is to make the debt recovery process less tedious and more effective. We are also planning to introduce a provision to provide legal sanctity to e-notices.
"So that an SMS and e-mails sent by banks can be considered as notice. This will help in fast-tracking the recovery of debt," sources said.
The Debt Recovery Tribunals (DRTs) Act was enacted in 1993 to provide a legal framework for the expeditious adjudication and recovery of debts due to banks and financial institutions.
However, the efficacy of this legislation in expediting debt recovery proved to be limited. As a result, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 was enacted to address these shortcomings and provide a more robust framework for debt recovery.
The government has undertaken several amendments to the DRT Act and the SARFAESI Act over the years.
The last changes in the law were made in 2016, when the government had moved amendments to the SARFAESI Act, and the Debt Recovery Tribunal (DRT) Act in Parliament to make debt recovery more effective.
The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 amended the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996.
The changes were aimed at a faster and more transparent system to tackle the bad debts in the banking system by fast-tracking the recovery process for banks and other financial institutions.
Other than this, the government has taken various initiatives to control non-performing assets (NPAs). As a result, the net NPAs of Scheduled Commercial Banks (SCBs) have declined to Rs 1.36 lakh crore (0.95 per cent) in March 2023 from Rs 2.31 lakh crore (3.13 per cent) in March 2015.
[Press Trust Of India]
