With an aim to improve the ease of doing business and to facilitate investment leading to higher economic growth and development, a Parliamentary Committee has sought comments from the stakeholders by June 22 on a bill to amend the Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Bill, 2016. The bill is currently being scrutinized by the 30-member Joint Parliamentary Committee headed by Rajya Sabha MP Bhupender Yadav.
Last month, the bill was introduced in Lok Sabha, seeks to amend four legislations -- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, 2002, the Recovery of Debts due to Banks and Financial Institutions Act, 1993, the Indian Stamp Act, 1899 and the Depositories Act, 1996.
Regarding Sarfaesi Act, 2002, amendments have been proposed to suit changing credit landscape which include specific timeline for taking possession of secured assets, debenture trustees as secured creditors as well as integration of 'registration systems under different laws relating to property rights with the Central Registry so as to create a central database of security interest on property rights.
Further, the bill seeks to amend the Indian Stamp Act, 1899, to exempt assignment of loans in favour of asset reconstruction companies from stamp duty and the Depositories Act, 1996 for facilitating transfer of shares held in pledge or on conversion of debt into shares in favour of banks and financial institutions.
Amid mounting concern over loan recovery in view of stressed assets to the tune of over Rs 8 lakh crore in the banking system, the government has come up with this legislation. The legislation proposes to give RBI powers to regulate asset reconstruction companies, prioritise secured creditors in repayment of debts and provide stamp duty exemption on loans assigned by banks and financial institutions to asset reconstruction firms.