New Delhi: Government will bring in a new legislation for speedy recovery of debts by banks and financial institutions to deal with non-performing assets of over Rs 110,000 crores.

The proposed 'Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Bill, 2002' is likely to be taken up in the monsoon session of Parliament, according to an official release.

The Bill, based on the recommendations of Narasimham and Andhyarujina committee reports, would deal with financial assets held by banks and financial institutions (FIs) in the form of securitised assets, setting up of asset reconstruction companies and enforcement of security interest, it said.

The proposed ARC to be formed with the participation of banks and FIs is expected to be in place within the current fiscal. An ARC would buy out NPAs from banks, securitise it and sell it to potential investors, in a bid to contain the NPAs.

But issues relating to securitisation, foreclosure and other aspects were looming large for many participants.

While government would stay away from the ARC, the public sector banks are likely to pick up majority of the stake in ARC and the government is also trying to rope in International Finance Corporation, the private lending arm of World Bank, and Asian Development Bank, although the latter had said it would be only a minority stakeholder in the ARC.

The Law Minister had earlier expressed concern over cases involving Rs 1,10,000 crore that were pending before Debt Recovery Tribunals, saying the system of creditors chasing debtors for recovery of loans should go.

PTI