Loan recovery laws to be revised

In an effort to expedite the recovery of bank loans in government sponsored programmes, the Orissa government is considering to implement a recovery act in line with the recovery Act of Uttar Pradesh (UP).

Some beginning has been made in this direction, and it will about a month to give a concrete shape to the new act.

A joint field visit of the sub-committee formed to take a look at various provisions of the Act in operation in UP and suggest changes in Orissa Public Debt Recovery Act (OPDR) is being planned. It will have representatives from the banks and the government.

After the field visit is completed, the process to change the required provisions of the Orissa Public Debt Recovery Act (OPDR) is expected to set in.

"A joint field visit with bank officials is planned and the exercise is expected to take about a month', Commissioner-secretary of the state revenue and disaster mitigation department, GVV Sharma told Business Standard. The process can take concrete shape only after that, he added. In the last meeting of the State Level Banker's Committee (SLBC), the issue was discussed elaborately.

It was decided that the State Bank of India (SBI) and UCO bank will collect basic field level data regarding the proposed changes in the OPDR Act by conducting one or two field visits.

Some bankers had even suggested the implementation of the provisions of the section 9 (3) and 9 (4) of the chapter 3 of the UP Act, which was lacking in the Orissa Act.

This, they argued, will help in improving the recovery.

Further, under the prevailing OPDR Act, the Tehasildar is not competent to make recovery of bank loans.

It is reported that there is a specific provision in the UP Act wherein the Tehasildar is competent to recover the loan dues even from legal representative of the debtor.

However, there is no such provision for recovery of loan dues from legal representatives in Orissa Act.

Add to it, the fees payable on the application for recovery is more or less same with that of civil suits and there is no provision of appeal in OPDR Act.

In this backdrop it was decided to examine the proposal to amend the Orissa Act suitably to incorporate these aspects.

Accordingly, a three member sub-committee with the deputy secretary, revenue and disaster mitigation department, as the convenor was formed to look into representative cases in field and come up with specific suggestion in the matter.

Though the overall recovery rate of all banks improved to 49.67 percent in March 2007 compared to 41 percent by end of March 2006, the recovery rate in government sponsored schemes continues to lag behind.

While the recovery rate for government sponsored schemes like IRDP/SGSG was only 36.25 percent by end of March 2007, under Pradhan Mantri Rojgar Yojana (PMRY), the rate of recovery was only 20.01 percent by end March 2007.