SC upholds amended loan recovery laws

SC upholds amended loan recovery laws

The Supreme Court has upheld the amended loan recovery laws, observing that speedy recovery was not only important for the efficient functioning of financial institutions but also for the “financial health of the country,” besides being “essential for economic and political stability.”A Bench comprising Justices J Chelameswar and SA Bobde acknowledged that recovery of bad loans known as non-performing assets (NPAs) by filing suits in courts “takes painfully a long time in this country.”The apex court said the changes defining the NPA norms were necessary as financial institutions were lending “huge amounts.” The Bench gave the ruling while dismissing more than 60 petitions, including 16 PILs, filed by borrowers challenging the amendment made by Parliament in 2004 to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002.The amendment had given liberty to financial institutions to decide the period meant for treating loans as NPAs and initiating recovery proceedings. Prior to this, RBI had set the NPA period at 90 days for banks and 180 days for NBFCs.The SC also imposed a penalty on the petitioners, asking them to pay 1% of their outstanding loans as cost to the financial institutions.

http://www.tribuneindia.com/news/business/sc-upholds-amended-loan-recovery-laws/35516.html

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