Banks may approach the government to further strengthen the Securitisation Act, which apparently got diluted with the waiver of a provision requiring defaulters to deposit 75 per cent of the loan amount with the court while appealing against the seizure order.

"We will take it up at the next meeting of the Indian Banks Association and then with the new government," a top official of a public sector bank told PTI in New Delhi on Monday.

While welcoming the Supreme Court judgement upholding the constitutional validity of the Securitisation Act, another banker said, "The initial fear psychosis, which was there in the Act, would wean away with waiver of Section 17(2) by the court."

The process of recovery would be hit since defaulters are now more free to move courts and there would be roadblocks in the form of "frequent" judicial intervention to the recovery of NPAs, now at over Rs 1,00,000 crore (Rs 1,000 billion).

Another banker said "big fishes" would now be able to buy more time as the Act has become "toothless" with the removal of punitive section.

Moreover, the opportunity costs would go up for the needy sectors since banks would hereafter be "doubly" careful while lending funds to them, he said.

They also said there was a need for a robust Credit Information Bureau, which would enable bankers to track defaulters and credit profile of borrowers before lending.

With the adoption of new norms for capital impairment stipulating the 90-day norms instead of 180 days for a loan to be declared as NPA, the official said, "Banks would now be more careful since "we are dealing with the public money."