President re-promulgates Securitisation Ordinance

NEW DELHI: President A P J Abdul Kalam has re-promulgated the Securitisation Ordinance to enable banks and financial institutions to take possession of defaulters'' securities and sell them, in a bid to tackle the problem of non-performing assets (NPAs) estimated at over Rs 100,000 crores.
This seeks to replace a similar Ordinance promulgated on June 21 this year, an official release said on Thursday.
This would also permit banks and FIs to create a market for the securitised assets and help improve their asset-liability management.
The re-promulgation of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002, would enable banks and FIs to set up Asset Reconstruction Companies which would buy NPAs from banks and securitise them in exchange for debenture units.
The Centre and the RBI have advised banks and financial institutions to take several steps for recovery of dues by evolving and implementation of recovery policy, compromise settlements through Settlement Advisory Committee and Monitoring and follow-up of NPAs at various levels in banks.
The Union Cabinet had given its nod for re-promulgation of the Ordinance last week.
The Ordinance would, however, not cover agricultural loans and small loans.