The Hindu : `Court stays stalled implementation of Securitisation Act'

Online edition of India's National Newspaper
Tuesday, Jun 10, 2003

Southern States

Southern States - Karnataka

`Court stays stalled implementation of Securitisation Act'

By Our Staff Correspondent

MANGALORE JUNE 9 . A series of stays granted by the High Courts of various States has stalled the implementation of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, the President of the Borrowers' Welfare Association, M.M. Kini, has said.

Addressing presspersons here on Monday, he said the Supreme Court had directed the Chief Justices of the High Courts to transfer all cases being heard under this Act to it.

He said financial institutions could take possession of the defaulter's property under the Act. They were no longer at liberty to confiscate property and auction it to recover loans given to people. The courts had declared any pressure tactics to recover loans illegal, with offences punishable with up to 10 years of imprisonment.

Mr. Kini pointed out that the December 13 Supreme Court judgment had made it clear that any such forceful action of selling or leasing of immovable property of a debtor was not permissible. The Madras High Court on May 12, 2003, disposing of a writ petition between Photocult, Chennai, and the Union Government, too had upheld this argument while directing the petitioner not to alienate or encumber the property.

He said the association, whose Mangalore chapter would be inaugurated on June 18, aimed to bridge the gap between borrowers and creditors.

Stating that the association was managed by the bank executives, he said it had handled a few thousand cases to the satisfaction of the parties concerned.

Asserting that the association would not entertain wilful defaulters, he said it would, however, come to the rescue of borrowers who were subjected to criminal trespass, abusive language, and physical attacks by anti-social elements and recovery agents, who harassed innocent borrowers.

He pointed out that the association supported the lawful implementation of recovery methods and peaceful settlements so that banks were relieved of their burden.

He said the association would arrange for new loans under highly liberalised schemes of all the banks which were sitting idle with around Rs. 2.2 lakh crore to lend.

Mr. Kini said the banks, which spent on advertising their various loans, often ended up making genuine borrowers' run from pillar to post to obtain a loan. The association would attempt to offer best possible solution to all its members and bankers to ensure a better relationship.

It was sad that bankers and other financial institutions were using provisions of the Securitisation Act to harass genuine borrowers, while they had no answer to problems posed by big borrowers who had defaulted on repayment to the tune of nearly Rs. 1.3 lakh crore.

The President of the Mangalore unit, Devdas Rao, and the General Secretary, N.K. Eshwar, were present.

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