Lok Sabha passes Bill on Reconstruction of Financial Assets

The Lok Sabha on 1 August 2016 passed the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016.

The bill was passed by a voice vote.

The bill seeks to amend four laws:
• The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
• The Recovery of Debts due to Banks and Financial Institutions Act, 1993
• The Indian Stamp Act, 1899
• The Depositories Act, 1996

Highlights of the Bill
• It simplifies the procedures by which there will be a quick disposal of claims of banks and financial institutions.
• It will empower the Reserve Bank of India (RBI) to examine the statements and any information of Asset Reconstruction Companies related to their business.
• The RBI may penalise a company if it fails to comply with any directions issued by the central bank.
• It says the stamp duty will not be charged on transactions undertaken for transfer of financial assets in favour of asset reconstruction companies. Financial assets include loans and collaterals.

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