“Banks have to do a balancing act during debts recovery”

G.S.Hegde, Principal Legal Advisor to Reserve Bank of India speaking at a workshop on SARFAESI in Madurai on Saturday. Photo: G. Moorthy

The Hindu : Madurai:26 feb 2012

Banks have to do a great balancing act when it comes to the subject of debts recovery. They have to ensure that the bank recovers the debts and protects its liquidity and at the same time it should not put the borrower in embarrassing situation said, G.S.Hegde, Principal Legal Advisor to Reserve Bank of India.

Delivering the inaugural address at the two-day workshop on SARFAESI Act (The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002,), titled ‘Is SARFAESI a complete code for recovery,' here on Saturday, Mr. Hegde talked about the days of debts recovery prior to the days of Debts Recovery Tribunal Act and the transitions and also cited how the Delhi High Court had mentioned that the DRT Act as unconstitutional.

SARFAESI Act allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans. It enables banks to reduce their non-performing assets (NPAs) by adopting measures for recovery or reconstruction.

Mr. Hegde mentioned that the banks should have only trained recovery agents and every bank shall have a grievance redressal forum with regard to debt recovery. He also spoke on how important it is to deal with humaneness and cited Justice A.R.Lakshmanan's observations in a case where he says how recovery agents have become modern day Shylocks in his words “A man's self-respect, stature in society are all immaterial to the agent who is only primed at recovery. This is the modernised version of Shylock's pound of flesh.”

Speaking earlier, D. Stanley David, presiding officer, DRT, Madurai said that bank officers should not have a closed mind and drive out the borrower but have to help him at the maximum to see whether he could avail loan.

A seminar book was released by N. P. Rajan, Deputy General Manager, Indian Bank, Madurai Zone and the first copy was received by K. Lakshmipathikumar, DGM, Canara Bank, Madurai circle.

The workshop among others deals with topics on, What is fair valuation of secured interest, Priority of charges, Agricultural Land and The Companies Bill-2011. Pala Ramasamy, Advocate, L. Balaji, Valuer were the convenors of the workshop.