FINANCE MINISTRY TO REVIEW LOAN RECOVERY PRACTICES

Taking serious note of alleged irregularities in the one-time settlement (OTS) schemes for recovery of non-performing loans of public sector banks and “undervaluation” of mortgaged properties during auctions, the Finance Ministry has called a fact-finding meeting this week. The Ministry has also sought proposals from the banks to improve the system including amending laws like the Debt Recovery Tribunal Act and the SARFAESI Act  to ensure faster recovery of the loan amount and setting a limit for no. of permissible adjournments by the Tribunals while hearing the cases.


According to RBI data, the amount recovered as a percentage of the money involved was the maximum through DRTs,  followed by SARFAESI Act.


As of now, some of the Public Sector Banks have already set up separate settlement advisory committee headed by retired High Court Judges to ensure more transparency in their OTS schemes.
Source: http://www.blonnet.com/2010/01/11/stories/2010011150690600.htm