JPC proposals on Sarfaesi Act, DRT to ease business

New Delhi: The unanimous reccomendations of the joint parliamentary committee on the debt recovery tribunal and the Sarfaesi Act are in sync with the bankcruptcy code that was passed in the last session of Parliament and will help improve ease of business and reduce the non-performing asset problem, committee chair Bhupendra Yadav said.
The report of the JPC contains measures that go a long way to assure investors of transparent tax policies and security of their funds in the event of disputes, Yadav said.He expressed the hope that the JPC report would be considered by the Cabinet soon so that an amended law can be passed in the current monsoon session of Parliament. The committee has negotiated tricky terrain like designation of agricultural land that will now be left to the states.
"The business of designating tribal, forest, agricultural land is not easy and often varies from state to state," explained Yadav. The MP, who has previously headed committees on the GST and bankcruptcy code, said he saw the 21 major amendments reccomended by the JPC being an important part of a series of measures taken by the Modi government to make business more transparent and reduce the scope for discretion and corruption. Yadav said the report calls for fixing a 30-day window to submit a view on the status of properties being taken over by banks and financial institutions, reducing the possibility of delays and connivance between officials and affected parties.
The committee also felt that a vacancy in a tribunal need not delay proceedings as a similarly placed judicial official can also hear a case relating to debt recovery and the securitisation of financial assets and enforcement of security interest Act. Yadav said there were some 70,000 disputes that add up to around Rs 5 lakh crore, and the changes reccommended to the two Acts will help reduce pendency with several cases relating to individuals and corporates. The contentious issue of tenancy in properties that are to be taken over has also been addressed with the tribunal now expected to reach an assessment on whether tenants predate the dispute. "This is necessary as sometimes tenancies are created to delay or stall the recovery process," the MP explained.
The committee has also suggested that non-financial institutions also be allowed to take over stressed assets apart from asset reconstruction companies. This would help in reducing NPAs, the panel has held.