Suggesting some changes to the proposed debt recovery law, a parliamentary panel on Friday submitted its report on the bill which seeks to expedite disposal of over 70,000 pending cases involving more than Rs 5 lakh crore.
The Joint Parliamentary Committee has proposed amendments, ranging from definitions to several terms such as company, financial lease, and secured creditor, to the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill.
The Bill seeks to facilitate expeditious disposal of debt recovery applications. There are around 70,000 cases are pending in Debt Recovery Tribunals involving more than Rs 5 lakh crore.
The committee proposed amendment to the net owned fund for a securitisation or reconstruction company.
"Hence for drafting clarity, the Committee decide to insert word higher after the words such other in proposed modified clause," the panel said in the report.
The Committee suggested relaxation of restrictions on holding controlling interest in the capital of Asset Reconstruction Companies so as to have no restrictions on the composition of board of directors of ARCs, it said.
The panel recommended that passing of an ex-parte order after the show cause notice of 30 days of the service of summons may be a violation of the principles of natural justice.
"The Committee are of the view that adequate opportunity should be provided to a borrower before an adverse adjudicatory stance is taken against him," it said.
The legislation proposes to give RBI powers to regulate asset reconstruction companies, priortise secured creditors in repayment of debts and provide stamp duty exemption on loans assigned by banks and financial institutions to asset reconstruction firms.
The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 is important legislation which seeks to amend the Recovery of Debts due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and make consequential amendments in the Indian Stamp Act, 1899 and the Depositories Act, 1996.
The object of the amendments proposed in the Bill is to improve the ease of doing business and facilitate investment leading to higher economic growth and development.
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