Punjab body asks FIs to put out names of loan defaulters

Institution of Valuers seeks amendments to Securitisation Act

Concerned at the steady increase in non-performing assets in banks, the Institution of Valuers, Chandigarh, wants the financial institutions to advertise the names of the defaulters so that they cannot further mislead the lending institutions.

It feels that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, had failed to achieve the desired results and there was an urgent need to make amendments to the Act.

Talking to Business Standard, B L Luthra, chairman, Institution of Valuers, Chandigarh, said: "Non-performing assets (NPAs) are rising steadily every year and have crossed Rs 135,000 crore. The increase is mainly due to big industrialists and prominent people defaulting on loans taken from financial institutions."

Suggesting ways to minimise the NPAs, he said there was a need for fixing uniform valuation fee-tariff for all the institutions and the payment to valuers should be made through cheque by the financial institutions.

There should be validity period for every valuation report and there is a need to take time bound action by the financial instutions by the courts, Debt Recovery Tribunals (DRTs) and official liquidators.

He says that the Debt Recovery Tribunal here has not decided even a single case since January last year.

More than 1100 cases are pending before the tribunal here. In the five years of its operations here, only about 110 cases were decided.

In some of the cases belonging to 1978 in which ex parte proceedings have been initiated, no decision has been taken so far.

Also, the NPA to the net advance of public sector banks have been growing as compared to private Indian banks and foreign banks operating in the country.

Urged the financial institutions to reduce the non-performing assets (NPAs), he says, "As more and more international companies setting up businesses in India and competition among the banks in the public and private sectors growing, valuation services need to become more professional and of international standards. Valuation was no longer an accounting purpose gimmick with various indices but a concrete action with multiple consequences. Valuation reports were critical legal documents and can be challenged in courts, most valuers were not visiting the sites for inspection while preparing the reports. There is a need to change that also".

"There is a need to amend the Securtitisation Act to achieve the desired results and make the list of defaulters public and show the amoung of money involved so that they do not further dupe other financial organisations. The condition of state financial corporations like PFC, PSIDCs that were given the power to recover the defaulting amount from the defaulters is also bad," says Luthra.