Resolution to streamline SARFAESI Act adopted in Nagaland Assembly

The Nagaland Assembly on Friday adopted a government resolution for streamlining the SARFAESI Act 2002 in the state which allows banks to auction properties of defaulters only to local people to recover loans.

The resolution on the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 was moved by Chief Minister Neiphiu Rio, who also holds the finance portfolio, on Thursday.

The resolution seeks to limit the auction of confiscated properties of borrowers in Nagaland to locals.

The law allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans.

It enables banks to reduce their non-performing assets by adopting measures for recovery or reconstruction.

Rio said the resolution will provide clarity to the implementing agencies of the SARFAESI Act read with Nagaland and Revenue Regulations (Amendment) Act, 2002.

The Nagaland Land and Revenue Regulations (Amendment) Act, 2002 amended the Assam Land and Revenue Regulations, 1886 by inserting a proviso permitting transfer by way of mortgage in favour of the banks, registered co-operative societies, and financial institutions with the condition that such entities shall not transfer any land to a person other than indigenous inhabitants of Nagaland except with the previous sanction of the state government or authority appointed in this behalf.

The non-implementation of the SARFAESI Act 2002 has been detrimental to the overall economic growth of the state as it has restricted the flow of credit to people with banks showing a reluctance to provide loans in the absence of secured assets and an effective mechanism for the expeditious recovery of dues in case of default in loan repayment, the chief minister said.

The provisions of the SARFAESI Act, 2002 cannot override any provision of the Constitution of India, he said.

Assembly Speaker Sharingain Longkumer put the resolution to vote and it was adopted by voice vote.