On Thursday, the Lok Sabha passed the Banking Regulation Amendment Bill, 2017 after Arun Jaitley, the finance minister of India declared that criminal and recovery proceedings will be started against bank loan defaulters who divert money and asserted that no one can claim equality in not repaying loans to the bank.
A debate took place regarding the bill, to which Jaitley replied that a company defaulting on loans cannot claim the right to equality in the treatment as regard to repaying the loan. He also said that the defaulting company cannot ask why it was being targeted when some other defaulters were being set free.
“No, that cannot be an argument. The system has the capacity to take only a certain number of cases. I’m sure they will take up more case,” he said, referring to the 12 non-performing assets (NPAs) that have been identified for action by the National Company Law Tribunal (NCLT).
He also said, “Many Non-Performing Asset (NPA) cases could be fraud, as money taken was diverted. These are not routine NPAs. Criminal proceedings will be carried out and the bank will start recovery procedure for such accounts.”
He justified the loans and said that the loans, which have turned NPAs, must have been given when the economy was in a “boom” period and they seemed good investment proposals. Nobody anticipated a global crisis at that time and in the last 3-4 years, prices of commodities collapsed.
“Our laws are obsolete and impeding the recovery process… therefore this mechanism was set up. It will select defaulter, direct banks to move expeditiously against the defaulter. NCLT will dispose of the case within 180 days. This process will recover the public money, so no one should have an objection,” he added.
After Jaitley’s reply, the house passed the bill, after rejecting a statutory resolution disapproving the Ordinance moved by a Congress member.
Under the bill, the central government may authorize the Reserve Bank of India to issue directions to any banking company to initiate insolvency in respect of a default under the provision of the Insolvency and Bankruptcy Code.