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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Govt to go after loan defaulters who divert funds, says Jaitley

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New Delhi: The Lok Sabha on Thursday passed the Banking Regulation (Amendment) Bill, 2017, after Finance Minister Arun Jaitley declared that criminal and recovery proceedings will be started against defaulters of bank loans who divert money and asserted that no one can claim equality in not repaying loans to the banks.


Replying to a debate on the bill, Jaitley said that a company defaulting on loans cannot claim the right of equality in treatment as regards repaying the loans.


He said defaulting companies cannot ask why it was being targeted when some other defaulters were being let free.


“No, that cannot be an argument. The system has the capacity to take only a certain number of cases. I’m sure they will take up more case,” he said, referring to the 12 non-performing assets (NPAs) that have been identified for action by the National Company Law Tribunal (NCLT).


He said the government would go after those who diverted funds got through loans and defaulted on payments. “Many Non-Performing Asset (NPA) cases could be fraud, as money taken was diverted.These are not routine NPAs.


Criminal proceedings will be carried out and bank will start recovery procedure for such accounts,” Jaitley said. After the minister’s reply, the House passed the Bill, after rejecting a statutory resolution disapproving the Ordinance moved by a Congress member.


Under the bill, the central government may authorise the Reserve Bank of India to issue directions to any banking company to initiate insolvency in respect of a default under the provision of the Insolvency and Bankruptcy Code.


It also has provisions empowering the Reserve Bank of India to issue directions to banks for resolution of stressed assets.


The minister said that the loans, which have turned NPAs, were probably given at a time when the economy was in a “boom” period and they seemed good investment proposals.


“Nobody anticipated global crisis at that time... in last 3-4 years, prices of commodities collapsed. We’re now trying find a solution for this difficult situation,” he said.


“Our laws are obsolete and impeding the recovery process... therefore this mechanism was set up. It will select defaulter, direct banks to move expeditiously against the defaulter.NCLT will dispose of the case within 180 days. This process will recover the public money, so no one should have objection,” he added.


Referring to NPAs which amounted to more than 13 per cent of advances in 2001, the figure came down to less than 3 per cent in 2007-08, Jaitley said. — IANS


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