Column: Disguising NPAs

Description

Regulators need to specify clear risk-weightage guidelines on repossessed properties Amid growing concerns about the deteriorating quality of bank loans, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfaesi), was enacted to aid in debt recovery, especially from wilful defaulters. Since the 2006 Supreme Court judgment allowing banks to simultaneously initiate multiple proceedings against the defaulters, the use of Sarfaesi by banks has significantly increased. While the possession of mortgaged property was facilitated by Sarfaesi, the liquidation of repossessed property proved a challenge, resulting in an amendment in December 2012. A specific component of this amendment is to allow banks to purchase properties placed under auction in the absence of other buyers, with the objective of reducing NPAs. Read more at: https://www.financialexpress.com/archive/column-disguising-npas/1112719/

Publication Date

8-5-2013

Publication Title

Financial Express

Publisher

The Indian Express [P] Ltd.

Keywords

Financial management, Financial system, NPAs, Banking

Source Link URL

https://www.financialexpress.com/archive/column-disguising-npas/1112719/

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