New Delhi, Nov. 21: The central government today promised to come down heavily on major defaulters who had placed the entire banking system in jeopardy by siphoning off loan funds.
Replying to a debate on the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Bill 2002, finance minister Jaswant Singh promised MPs that the government would act impartially and crack down on all wilful defaulters.
The MPs had objected to the Securitisation Bill being soft in the area of penalties imposed on defaulters and not discriminating between wilful and inadvertent defaults.
Members from several parties, including Congress leader Priya Ranjan Das Munshi, wanted the government to bring criminal proceedings against the defaulters as a deterrent to mounting NPAs estimated to be at nearly Rs 1,00,000 crore. The finance minister said many defaulters had started approaching financial institutions, which had issued notices to 123 account holders, for a one-time settlement.
Singh also promised to bring a Bill for lenders’ liability soon. He added the RBI was now formulating guidelines on the basis of the Securitisation Ordinance. Under the provisions of the Bill, banks and FIs can take the help of metropolitan magistrate for seizing assets of defaulters and to sell or lease the same, or take over the management in the event of default. It also facilitates easy transfer of financial assets by securitisation companies. It also empowers securitisation companies to raise funds by issue of security receipts to institutional buyers of the seized assets.