Uti May Come Under Securitisation Bill

Finance minister Jaswant Singh today said the government was planning to extend the ambit of the securitisation bill for recovery of non performing assets of UTI.

Winding up the debate on the bill with parliament passed the bill that would enable banks and financial institutions to recover assets from defaulters without going through the judicial process, Singh said a notification would be promulgated soon extending the legislation to cooperative banks and Non-Banking Financial Companies also.

Replying to a two-day debate on the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Bill 2002 in Rajya Sabha today, Singh also announced a new one-time settlement scheme for amounts upto Rs 10 crore.

He said the Reserve Bank of India (RBI) has already put in place a number of yardsticks for formulating responsibility of lenders and the government is considering another piece of legislation on lenders' responsibility.

The bill, already passed by the Lok Sabha last week, was passed by the upper house today by a voice vote after rejecting the statutory resolution moved by Kapil Sibal of Congress seeking disapproval of the ordinance issued on August 21 this year in this connection.

The Parliament also passed the Negotiable Instruments Bill, which provides for enhanced punishment for bouncing of cheques.

Singh said contrary to perception, 75 per cent of defaulters owe up to Rs one lakh while only 7,000 defaulters owe amounts from Rs one to Rs five crore.

Assuring the House that declaration of default was not arbitrary, the minister said the RBI has already issued guidelines clearly defining willful default.

On the one-time settlement scheme, Singh said the detailed guidelines will be issued shortly by the RBI while hoping that response to the scheme this time would be more encouraging since a legislation was being put in place.

Singh said 25 public sector banks have issued notices for recovery of non-performing assets worth Rs 3,260 crore while financial institutions have also issued notices for recovering another Rs 3,600 crore.

While asserting that Debt Recovery Tribunals (DRTs) could waive the condition of depositing 75 per cent of the amount due by borrowers under certain conditions, Singh said proceedings by the Board of Industrial and Financial Reconstruction (BIFR) will cease only when the 75 per cent deposit condition is met.