FINANCE MINISTER ASKS PSB CHIEFS TO INCREASE USAGE OF SARFAESI LAW TO RECVOER BAD LOANS:
The finance ministry has asked public sector banks to increase the usage of Sarfaesi Act provisions to quickly recover bad loans.
it also wants PSBs to adopt the latest sophisticated risk management tools to effectively measure risks in lending and price loans accordingly so that there is an improvement in the asset quality .These were measures suggested by the new Financial Services Secretary Mr.G.S.Sandhu to the PSB Chiefs.
This development comes in the backdrop of rising non -performing assets of PSBs and the difficulties being faced by the government in infusing more capital,owing to fiscal constraints .The ministry has been asking PSBs to strengthen their efforts to recover bad loans.
The Ministry has now said where ever possible the PSBs must exercise their rights under Section 13(4) of the Sarfaesi Act, which empowers the lenders to take possession of the secured assets of the borrower (whose accounts have turned NPA) and sell the assets before their value deteriorates.The section also empowers lenders to takeover the management of the business of the borrower and sell the assets if needed.
The Data for 2012-2013 showed that out of the three methods for NPA recovery Sarfaesi Act debt recovery tribunals and loak adalats Sarfaesi Act route was the most effective .
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