New Delhi: President A P J Abdul Kalam has re-promulgated the 'Securitisation
Ordinance' to enable banks and financial institutions to take possession of
defaulters' securities and sell them, in a bid to tackle the problem of non-
performing assets (NPAs) estimated at over Rs 1 lakh crores.
This seeks to replace a similar ordinance promulgated on June 21 this year, an
official release on August 22 said.
This would also permit banks and FIs to create a market for the securities assets
and help improve their asset-liability management.
The re-promulgation of Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Ordinance 2002 would enable banks and FIs to set up
Asset Reconstruction Companies which, would buy NPAs from banks and securitise them
in exchange for debenture units.
The Centre and the RBI have advised banks and financial institutions to take several
steps for recovery of dues by evolving and implementation of recovery policy,
compromise settlements through Settlement Advisory Committee and Monitoring and
follow-up of NPAs at various levels in banks.
The Union Cabinet had given its nod for re-promulgation of the ordinance last
week.
The ordinance would, however, not cover agricultural loan and small loans.
