Defaulters stifling business growth: Indian finance minister warns tougher debt recovery laws
He lauded the central bank's role in providing more flexibility to banks to restructure debt and change management. Photograph: (Others)
Making a strong case for expeditious adjudication of debt recovery cases, Indian finance minister Arun Jaitley today said the recovery procedures need to be made more efficient and effective by empowering banks and bringing legislative changes.
The minister asserted that the delay in recovering funds cannot be carried to an "unnatural extent" and giving endless opportunities to defaulters will only "hurt the larger investment environment of the country".
"It is not a usual judicial or quasi-judicial procedure when endless opportunities have to be granted to people to defend cases because if natural justice is carried on to unnatural extents, litigation will become unending. Therefore, efficiency has to be introduced into the recovery procedure as far as the defaulting parties are concerned," he said.
Close to 95,000 cases involving about $75 billion are pending before debt recovery tribunals across the country. Jaitley said money blocked by such defaulters prevent the banks from funding others who "could have utilised the investment for fruitful purposes and benefitted the country".
He lauded the central bank's role in providing more flexibility to banks to restructure debt and change management. He said the recent time limit set by the RBI for disposal of debt recovery cases will help improve ease of doing business by ensuring speedier resolution of defaulted loans.
"Besides making changes in the insolvency law, the government has made changes in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) law and debt laws. And we have cut short procedures in order to add efficiency to the whole system," he added.
Now, a district magistrate has to decide on applications by banks and financial institutions within a specific time limit of 30 days.
(WION with inputs from PTI)