Union Budget 2019: Bank unions bat for strong loan recovery laws with provision to confiscate defaulters’ assets

With the rise in NPAs, the government should institute more debt recovery tribunals and fast-track courts to recover bad loans, it said.

Press Trust of India June 13, 2019 19:06:46 IST
Union Budget 2019: Bank unions bat for strong loan recovery laws with provision to confiscate defaulters’ assets
  • Fast-track courts shall have to be vested with more powers to recover bad loans and stringent laws should be enacted

  • They also called for shutting down asset reconstructions companies

  • They said IBC is facilitating defaulters to get away easily as banks are forced to take huge haircuts

Mumbai: Bank unions have called upon Finance Minister Nirmala Sitharaman to enact strong recovery laws with a provision to confiscate the personal assets of directors of defaulting companies.

Sitharaman, the first full-time woman finance minister, will be presenting the budget on 5 July.

In a pre-budget representation, the All-India Bank Employees Association said, "to facilitate loan recoveries,
laws should be enacted/amended to confiscate personal assets of the directors in case of default by a company."

Union Budget 2019 Bank unions bat for strong loan recovery laws with provision to confiscate defaulters assets

File image of Nirmala Sitharaman. ANI

Fast-track courts shall have to be vested with more powers to recover bad loans and stringent laws should be enacted to ensure more recoveries, the unions said in a letter to the finance minister.

They also called for shutting down asset reconstructions companies.

The letter further said the Insolvency and Bankruptcy Code (IBC) is facilitating defaulters to get away easily as banks are forced to take huge haircuts.

"The IBC favours resolution of bad loans instead of recovery. Hence, the recovery mechanism should be strengthened instead of resolution process," the letter said.

To make the bankers more accountable, they said a system must be evolved to ensure accountability and
responsibility on the part of MD/CEOs, executive directors and other senior executives of state-run banks who are involved in credit sanctions and of the loans became NPAs within one year.

With the rise in NPAs, the government should institute more debt recovery tribunals and fast-track courts to recover bad loans, it said, adding, "wilful defaults should be declared a criminal offence by suitable amendments."

"The RBI should publish the list of defaulters, who owe to banks more than Rs 1 crore, every six months with updates," the letter said.

The unions also suggested the finance minister to announce a separate development finance institution/bank to finance infrastructure projects.

"In the absence of domestic financial institutions, the public sector is now extending long-term credit to
infrastructure projects and thus there is a distinct asset and liability mismatch. Short-term funds of banks are locked up in long-term projects, inflating NPAs," the letter said.

They also suggested the Reserve Bank stop issuing licences to private sector banks and also scrap on-tap
licensing policy.

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Day 1 of Monsoon Session sees Question Hour scrapped amid Opposition fury, Rajya Sabha deputy chairman re-elected
Politics

Day 1 of Monsoon Session sees Question Hour scrapped amid Opposition fury, Rajya Sabha deputy chairman re-elected

The Opposition alleged that the Centre was trying to throttle democracy by doing away with the Question Hour, which it called the "Golden Hour" of the House

Parliament Updates: Lok Sabha adjourned sine die after House passes Major Port Authorities Bill, 2020; Monsoon session cut short by 7 days
Politics

Parliament Updates: Lok Sabha adjourned sine die after House passes Major Port Authorities Bill, 2020; Monsoon session cut short by 7 days

Parliament LIVE Updates: The Monsoon Session of the Parliament was adjourned sine die on Wednesday, 7 days before the schedule, amid concerns of the spread of coronavirus among lawmakers

Parliament Updates: Lok Sabha passes Epidemic Diseases (Amendment) Bill, 2020 by voice vote
India

Parliament Updates: Lok Sabha passes Epidemic Diseases (Amendment) Bill, 2020 by voice vote

Parliament LIVE Updates: The Lok Sabha on Monday passed the Epidemic Diseases (Amendment) Bill, 2020 by voice vote after a detailed debate.