Government mulls roping fast-track courts to chase bad loans of Rs 100cr+ -Economic times 13th June 2014
NEW DELHI: The government is mulling fast-track courts to try loan default cases of over Rs 100 crore as part of a plan to reduce the pileup of bad loans at state-run banks.
The finance ministry has set up a committee headed by VK Bhasin, former secretary in the law ministry's legal department, to suggest measures to deal with high-value willful defaulters.
"The committee will also revisit recovery laws to make them more effective," a senior government official said on condition of anonymity. There are over 40,000 cases worth Rs 1.73 lakh crore pending before various debt recovery tribunals.
"These (fast-track) courts will have the mandate to settle issues within a time frame," the official said, adding that they will be empowered to auction personal assets of promoters to recover money.
The finance ministry is also looking at ways to make promoters accountable for the defaults.
"Promoters often hide behind a corporate veil and take no responsibility for failed ventures. The committee will suggest legal routes to make such promoters accountable," the official said. The top 30 non-performing accounts of state-run banks account for 40.2 per cent of their gross bad loans.
In 2013, bank unions had put out a list of top corporate defaulters, which included Kingfisher AirlinesBSE 3.31 %, Winsome Diamond, Zoom Developers and Electrotherm IndiaBSE 1.29 %.
Gross NPAs of public sector bank rose to 4.44 per cent in March from 3.84 per cent in the year-ago month. "In the case of Kingfisher Airlines, the banks could not seize the promoter's personal assets because of the existing legal complications.
We need to work out a mechanism where there should not be a rich promoter and an ailing company," said one of the committee members, which, besides banks, has representation from Indian Banks' Association.
The government is also ..
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