Barely a week after the promulgation of the Securitisa- tion and Reconstruction of Financial Assets and Enforce- ment of Security Interest Ordinance, 2002, the finance ministry has sent a note to banks urging them to act fast. The government wants the banks to take on corporate defaulters on a war footing.
The Ordinance gives banks sweeping powers to tackle defaulters. The banks can now change or take over the management; supersede the board of the company; sell or lease out the business of the defaulting borrowers; and take possession of all the secured assets.
Any borrower who has not been able to pay interest on a loan or the principal for two consecutive quarters is defined as a defaulter.
