Radical Steps Mulled For Debt Recovery

The Andhyarujina committee report on legal reforms in the banking sector yesterday suggested sweeping powers for debt recovery tribunals (DRTs) and radical laws for empowering banks and financial institutions to seize securities without the intervention of the courts and sell them for recovery of loans.

The Committee also recommended a separate Securitisation Bill to facilitate transfer of financial assets in the economy.

The 10-member expert committee, under former solicitor general T R Andhyarujina, was formed in February, 1999 to formulate specific proposals in the laws governing the banking sector. It was formed according to the recommendations of the Narasimham Committee II report on banking reforms, which called for wide-ranging changes in the legal framework. The committee submitted its report to finance minister Yashwant Sinha yesterday.

 

The committee has recommended amendment to the Recovery of Debts due to the Banks and Financial Institutions Act, 1993 and Sick Industrial Companies Act, 1995.

On the DRTs, the committee said they be empowered with expeditious disposal of proceedings; their composition be changed to include project finance experts; and the Central government be invested with legislative powers to make regulations for the procedure to be adopted by all the DRTs.

It has also recommended amendment of section 28 of the Indian Contracts Act, 1872 and a radical legislation for banks and financial institutions to take possession and sale of securities without the intervention of the court, in respect of both immovable property and moveable assets.