New Delhi: Against the backdrop of Vijay Mallya episode, the Lok Sabha today passed a bill that provides for expeditious recovery of bad loans by the banks, with the government saying the country cannot have a banking system where people take loans and do not repay.
The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, passed by by voice vote, seeks to amend four laws -- Sarfaesi Act, DRT Act, Indian Stamp Act and Depositories Act.
Finance Minister Arun Jaitley said the banks must be empowered to take effective legal action against defaulters and the insolvency law, securitisation law and DRT law are steps in that direction.
At the same time, he assured the House that banks will take a compassionate view on education loan defaults but there will be no waiver.
"The present law simplifies the procedure by which there will be quick disposal of pending cases of banks and financial institutions by Debt Recovery Tribunal," Jaitley said.
Pitching for speedier recovery of debt, he said, "We cannot have a banking system where people take loans and do not repay."
He said the changes in the law are aimed at simplifying the procedure for quick disposal of pending cases.
The move assumes significance as it comes against the backdrop of the episode involving liquor baron Vijay Mallya, who owes Rs 9,000 crore to banks, but has left the country to take refuge in England.
Jaitley said if loans taken are not repaid, the Centre or state budget will have to provide for the waiver.
"If loans are to be waived off, someone has to step in. We should not create a culture that I have taken a loan and I can sleep well and banks should be answerable," Jaitley said.
On concerns expressed with regard to education loans, the Minister said some compassion has to be shown if someone is unemployed and till he gets a job, but the loan cannot be written off.
"... Write off will put banking structure into a position where banks are not able to extend loans," he said.
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Updated Date: Aug 01, 2016 19:42:20 IST