Banks told to crack down on defaulters

NEW DELHI: The Centre has warned banks on soft-peddling in issuing notices to defaulters despite arming them with the Securitisation Act and said no “under-hand dealings� will be tolerated. “I have seen that wherever it is essential to apply the Securitisation Act, banks are not issuing the notices because of some under-hand dealings between the parties and bankers,� minister of state for finance banking, insurance and expenditure, Anandrao V Adsul said.
The Securitisation Act, which was passed by Parliament in ‘02, envisages sending notices to the wilful defaulters after giving them sufficient time, to seize the properties as part of efforts to spruce up recovery in the wake of burgeoning non-performing assets, standing over Rs 55,000 crore. He said nobody had the time to follow the “thieves� and monitor how many notices had been issued.
“Only I am the one who is trying...And unfortunately I am alone (in this exercise),� the minister said. Though admitting slow place in issuing notices, banking officials said they were awaiting an early verdict from the Supreme Court in the case of Mardia Chemicals.
At present, the situation is a “bit hazy�, especially on selling the assets after their possession and “unless, there is an early dispensation of verdict from the Supreme Court, it will be difficult for the banks to slap notices at the pace it is required,� they said.
“No banker will like to jump the gun,� a senior official of a public sector bank said, referring the case of Mardia Chemicals, which is now before the Supreme Court. In view of impending elections and the Centre’s claims of ‘India Shining,’ banking sources said there were “practical� difficulties in enforcing the Securitisation Act, indicative of external pressures. “Had we slapped notices to defaulters at the pace we are expected to do, it will definitely have some dampening effect on the booming stock markets,� they said.
Asked whether any high M-cap entity was involved, they refused to elaborate. “It is neither our intention to expose big wigs nor to douse the industrial boom,� they said, adding that their focus was to only recover the money, pooled from millions of average households in the country.