Prof N L Mitra, legal consultant to RBI, is busy working on the codification of banking laws for the central bank. Last week, he submitted a report on bankruptcy laws which has made several fairly radical recommendations.
Apart from advocating the setting up of bankruptcy institutions, the report has suggested the repeal of the Sick Industrial Companies Act and abolition of the Board of Industrial and Financial Reconstruction (BIFR).
Mitra, who is also director of the Centre for Business Law Studies, Jodhpur, rues the fact that there are no laws for mortgage of movables and hypothecation, hire-purchase, or lease finance. Excerpts from an interview with Tamal Bandyopadhyay
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Bankers blame the legal system for all the ills in the banking system. Why is this so?
The entire banking system is based on common law practices; there is no codified law. So if you want to make it absolutely rule-based