Search the Internet          Tips  Sites: Finance, Investment

Ordinance for tackling NPAs promulgated

The government on Monday promulgated an ordinance for setting up asset reconstruction companies and securitisation of assets to deal with banks and financial institutions to recover dues from defaulters faster and reduce their non-performing assets, now estimated at over Rs 1,100 billion.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance was cleared by the Cabinet on June 18.

"The ordinance deals with three distinct actions in respect of financial assets held by banks and FIs in the form of securitisation of financial assets, setting up of asset reconstruction companies and enforcement of security interest," an official release said in New Delhi on Monday.

The ordinance, based on suggestions of Narasimham and Andhyarujina committees, would enable banks and FIs to recover their debts expeditiously from the defaulters, it said.

While the government was planning to put in place adequate legislations for speeding up recovery of loans, the Debt Recovery Tribunals in the country have stepped up their efforts as well.

The amount of assets recovered through the DRTs increased to Rs 21.53 billion last fiscal as against Rs 11.85 billion in 2000-01 and Rs 7.52 billion in 1999-2000, the release said.

The government and Reserve Bank have also asked banks to recover sticky assets through one-time settlement schemes, following up NPAs at various levels in the bank and using Lok Adalats to settle disputes for loans upto Rs 500,000.

ALSO READ:
More Money Headlines