Finance Minister Arun Jaitley introduced the Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Bill, 2016 in the Lok Sabha on Wednesday. The Bill now has been referred to a Joint Committee of Parliament (JCP).
The Bill is aimed at speeding up the process of resolving debt issues taking a toll on the creditors including banks and financial institutions.
Coming on the heels of the Insolvency and Bankruptcy Code, 2016, the Bill seeks to further amend four legislations – the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002, the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996.
The joint committee is likely to have 30 members – 20 from the Lok Sabha and 10 from the Rajya Sabha.
Notably, Finance Minister had in the Union Budget 2016-17 proposed to amend the Sarfaesi Act to enable the sponsor of an ARC to hold up to 100 per cent stake in the Asset Reconstruction Company and permit non-institutional investors to invest in Securitisation Receipts.
Jaitely had also declared to strengthen Debt Recovery Tribunals (DRTs) to crack the whip on defaulters and computerised processing of cases to expedite resolution of stressed assets. The Bill will address both the said issues.
Once passed it will help banks that are facing over Rs 8 lakh crore of stressed assets recover bad loans faster.