Monday, Oct 21, 2002
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By Our Special Correspondent
Leading the campaign is Murli S. Deora, president, Mumbai Pradesh Congress Committee, who recently wrote to the Congress president, Sonia Gandhi, suggesting that the party support the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002. The ordinance was first issued in June this year and re-promulgated in August, as it could not be brought before Parliament during the monsoon session.
While there is support from political parties to recover the outstanding loans of banks and financial institutions, there has been some opposition to the ordinance, particularly from the Left parties, on the ground that it is "faulty.'' If the Congress agrees to support the ordinance, Mr. Singh will have little difficulty in getting it through Parliament. In his letter to Ms. Gandhi, Mr. Deora listed out some of the objections from industry to the ordinance. Contesting the complaint that the ordinance gave power to the banks and financial institutions to adjudicate the claims against borrowers, and did not provide for a separate authority to adjudicate, Mr. Deora pointed out that such powers were already being enjoyed by the State Finance Corporations.
On the second objection of industry that the ordinance does not distinguish between wilful and non-wilful default, Mr. Deora said that the borrowers had to realise that loans given out of public money had to be repaid and if the borrower was unable to repay, he should allow the securities against the loan to be sold for the realisation of the outstandings. "Repayment of loan or recovery through sale of securities is not a penalty; it is compliance with the terms of loan agreement.'' The objection that the ordinance takes away the benefit of rehabilitation through the Sick Industrial Companies (Special Provisions) Act, 1985, has been answered by the point that banks and financial institutions initiated action for recovery only after they reached the conclusion that the company's activities were not viable and it was not possible to rehabilitate the company. Against the backdrop, Mr. Deora suggested to Ms. Gandhi that the party should support the ordinance for conversion into an Act of Parliament to release the Rs. 1,00,000 crores locked up as NPAs.
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