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Showing posts with label Sarfaesi Act. Show all posts
Showing posts with label Sarfaesi Act. Show all posts

Saturday, 6 May 2017

22:37

The promulgation of Banking Regulation (Amendment) Ordinance, 2017,Ordinance enables the Union Government to authorize the Reserve Bank of India (RBI) to direct banking companies to resolve specific stressed assets

The promulgation of Banking Regulation (Amendment) Ordinance, 2017,Ordinance enables the Union Government to authorize the Reserve Bank of India (RBI) to direct banking companies to resolve specific stressed assets

The promulgation of Banking Regulation (Amendment) Ordinance, 2017 will lead to effective resolution of stressed assets, particularly in consortium or multiple banking arrangements 
The Ordinance enables the Union Government to authorize the Reserve Bank of India (RBI) to direct banking companies to resolve specific stressed assets 
The promulgation of the Banking Regulation (Amendment) Ordinance, 2017 inserting two new Sections (viz. 35AA and 35AB) after Section 35A of the Banking Regulation Act, 1949 enables the Union Government to authorize the Reserve Bank of India (RBI) to direct banking companies to resolve specific stressed assets by initiating insolvency resolution process, where required. The RBI has also been empowered to issue other directions for resolution, and appoint or approve for appointment, authorities or committees to advise banking companies for stressed asset resolution. 
This action of the Union Government will have a direct impact on effective resolution of stressed assets, particularly in consortium or multiple banking arrangements, as the RBI will be empowered to intervene in specific cases of resolution of non-performing assets, to bring them to a definite conclusion. 
The Government is committed to expeditious resolution of stressed assets in the banking system. The recent enactment of Insolvency and Bankruptcy Code (IBC), 2016 has opened up new possibilities for time bound resolution of stressed assets. The SARFAESI and Debt Recovery Acts have been amended to facilitate recoveries. A comprehensive approach is being adopted for effective implementation of various schemes for timely resolution of stressed assets. 

 Source:PIBNEWS
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Saturday, 7 May 2016

19:22

DRTs to go online, dispose cases faster

DRTs to go online, dispose cases faster

In a bid to expedite non-performing assets’ (NPAs) recovery, the government is trying to make debt recovery tribunals online and enable non-institutional investors to buy asset reconstruction companies’ security receipts.
The government will introduce two Bills to amend The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002, and the Recovery of Debts Due to Banks and Financial Institutions (DRT) Act, 1993, in the current session of Parliament.
The amendment to the DRT Act will strengthen these tribunals and focus on improving the existing infrastructure, including the computerised processing of court cases to support reduction in the number of hearings and faster disposal of cases.
“The DRT will become the country’s first online court,” Finance Minister Arun Jaitley had said in March, at the second edition of Gyan Sangam. Changes in the Sarfaesi law will enable non-institutional investors to invest in security receipts issued by asset reconstruction companies (ARCs,) which buy bad loans from banks at a discount.
In case of corporate bond defaults, the changes will allow bond and debenture trustees to use provisions of Sarfesi Act as well. So far only banks and financial institutions can use these rules in bond default cases.
The change may give “secure creditors” the first right to auction an asset in order to recover the dues. This may take precedence over state laws. The amendment would also aim at reducing the number of adjournments so that litigation time is reduced. Besides, the government is setting up a central registry for lodging records of multiple loans given to same parties. “We have got inter-ministerial approval for amendment of Sarfesi Act and DRT laws. It will help make recoveries faster for banks,” said a finance ministry official.

 Source:BankingUpdates
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Thursday, 5 November 2015

08:16

SBI challenges JK High Court's order on SARFAESI Act.

SBI challenges JK High Court's order on SARFAESI Act.

In a significant development, country’s largest public sector bank- State Bank of India- has filed a Special Leave Petition in the Supreme Court challenging a judgment of the J&K High Court on Sarfaesi Act 2002. The J&K High Court had ruled that the Parliament-enacted Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002 was not applicable to Jammu and Kashmir.

"The HC erred in holding that Sarfaesi Act adversely impacts the inherent natural and constitutional right of the state subjects. There cannot be any inherent natural and constitutional right to take a loan from a bank and decline to repay the same," the SBI pleads in its petition.According to the bank the purpose behind Sarfaesi Act was to “empower secured creditors to take measures for recovery of their dues without the intervention of courts or tribunals and help reduce their non-performing assets (NPAs).”

"Parliament has the power to enact this special provision, that is Sarfaesi Act, because recovery of dues is an essential function of any banking institution and in exercise of its legislative powers the Parliament can provide a mechanism by which loans can be recovered," the bank pleads in its petition.The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the Sarfaesi Act) is an Act of the Parliament of India.

It allows banks and other financial institution to auction residential or commercial properties to recover loans.A senior SBI official informed Greater Kashmir that the bank filed the petition seeking revision of JK High Court order as the Parliament had enacted Sarfaesi Act to enable the banking industry tackle delay in recovery of loans.
"The Act allows banks to recover debts by taking possession of secured assets and sell them without intervention of tribunals or courts in other parts of the country. However, in Jammu and Kashmir, the banks are finding it difficult to recover loan amounts due to non-applicability of the securitization Act,” he said.

"Parliament had specifically provided that all transfer of properties under the Sarfaesi Act would be appealable before the District Judge or the high court to protect state subjects' interests in their properties,” SBI pleaded before the Supreme Court.Interestingly banks- both private and public sector - have been pressing for applicability of SAFAESI Act in the state.However, the Jammu and Kashmir HC ordered in the petition filed earlier before it that SARFAESI Act cannot be extended to state.

A division bench of the High Court comprising Justice M H Attar and A M Magrey had held in the 76-page judgment earlier this year that any law made by the Parliament which affects the laws made by State legislature cannot be extended and applied to J&K.

"The State of J&K would be at liberty to enact law similar to that of SARFAESI Act for securing the interests of the banks and financial Institutions," it observed.
"Article 35(A) of the Constitution of India, which has been applied to the State of J&K clarifies the already existing constitutional and legal position and does not extend something new to state of J&K," the bench held, observing that Article 35-A was only a clarificatory provision to clear the issue of constitutional position obtaining in rest of country in contrast to J&K.

"This provision clears the constitutional relationship between people of rest of country with people of J&K. It is in essence an information to the citizens of rest of country that on constitutional and legal plank they in all respects do not constitute a class with citizens of J&K," the court had said and held that the J&K citizens have their own constitution and their sovereign character which cannot be challenged, altered or abridged.

Meanwhile, a bench of Justices J S Khehar and R Banumathi issued notice to the writ petitioners, mainly traders from Jammu and Kathua, who had successfully challenged the application of Sarfaesi Act to the residents of J&K.
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