Lok Sabha clears bill to amend Sarfaesi, debt recovery tribunal acts
GN Bureau | August 2, 2016
To ensure faster recovery and resolution of bad debts by banks and financial institutions, and easier functioning of asset reconstruction companies (ARCs), the Lok Sabha has passed a bill to amend the existing Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, and the debt recovery tribunal (DRT) Act.
The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 was introduced by finance minister Arun Jaitley in Lok Sabha on May 11, 2016.
According to prsindia.org, it sought to amend four laws: (i) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI), (ii) Recovery of Debts due to Banks and Financial Institutions Act, 1993 (RDDBFI), (iii) Indian Stamp Act, 1899 and (iv) Depositories Act, 1996.
The amendments to the Sarfaesi Act allow secured creditors to take possession over collateral, against which a loan had been provided, upon a default in repayment. This process is undertaken with the assistance of the district magistrate, and does not require the intervention of courts or tribunals. The bill provides that this process will have to be completed within 30 days by the district magistrate.
Besides forming a central registry to maintain records of transactions related to secured assets, the bill creates a central database to integrate records of property registered under various registration systems with this central registry. This includes integration of registrations made under Companies Act, 2013, Registration Act, 1908 and Motor Vehicles Act, 1988.
Read more about The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016.
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