New Delhi: In a bid to strengthen the regulatory and institutional framework related to recovery of loans given by banks and financial institutions, the government has decided to amend the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. The proposed amendment would enable banks to effectively deal with the problem of bad loans.

The Cabinet would introduce the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011 in the Winter Session of Parliament which will amend SARFAESI. The decision was taken in the Cabinet meeting chaired by Prime Minister Manmohan Singh.

"The proposed amendments would help banks in several ways. According to the current Securities Act, the provision to seize the property or sale the same is very technical. The banks and financial institutions were facing problems in recovery of loans due to procedural delays.  But amendments would help in expeditious recovery of bad loans”.

There are certain powers relating to issuing orders on recovery to Chief Metropolitan Magistrates and District Magistrates but that are non-delegable, he said. Enabling provisions have been made to delegate powers to Additional Metropolitan Magistrate and Additional District Magistrate as well.

(JPN/Bureau)