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Bank shows way by swoop on defaulter

Calcutta, Dec. 15: In an act likely to be followed by other financial institutions, the Union Bank of India has begun a crackdown on big borrowers who have defaulted on loan repayments.

Armed with a new Ordinance on attachment of secured assets of defaulting companies, the Union Bank of India became the first in Bengal to take over the secured assets of a “big borrower”. It is planning to move against another tomorrow.

“Similar takeovers are being lined up,” said a bank official.

Last Thursday, a team of bank officials and solicitors descended on Bagnan in Howrah and locked up the premises of Indumati Rice Mills. The owners gave a “peaceful possession”, the officials said.

P.S. Joshi, assistant general manager of Union Bank, said this was the first “takeover” of its kind in the state under the new Ordinance. “The defaulting amount of the company was Rs 46 lakh. It was a very old account,” Joshi said.

Officials of the bank said the next on the line were the assets of a company in Lake Town in Calcutta. The “operation” is likely to be launched tomorrow.

“We will attach a flat of the guarantor of a proprietorship company there,” the officials said. “Such takeovers will continue in the near future,” bank sources said. “The bank would sell off the attached properties to recover the debts.”

However, the officials apprehend that the takeover at Lake Town would not be as smooth as in Bagnan.

“If peaceful possession of the assets is not handed over, an application has to be made before the chief metropolitan magistrate or the district magistrate, as the case may be, for taking necessary steps to take their possession,” an official said.

Earlier, banks had to approach a court or the Debt Recovery Tribunal and the mortgaged assets were seized only after a decree was issued. However, under the new Ordinance, the banks have been empowered to take over the secured assets of the defaulting companies.

With the non-performing assets of the nationalised banks in Bengal amounting to several hundred crores, some officials feel the precedence set by the Union Bank is likely to be followed by others to recover debts.

However, things may not be that easy. “There is no effective machinery in the commercial banks unlike the state co-operative banks,” a senior official of the state co-operative department told The Telegraph.

“Under the order of the chief secretary, officers of the co-operative banks and government officials form a team in every district and loans are recovered with assistance from police and the district administrations,” the official said.

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