Attempt to keep families from being thrown onto streets; bill to prevent foreclosure of homes; know more

THIRUVANANTHAPURAM: The government has come up with a law to prevent the seizure of houses for defaulting on loans of up to Rs 5 lakh. Those who have not intentionally defaulted on their repayments and have an annual income of less than Rs 3 lakh will be protected. The cabinet meeting has approved the draft of the 'Kerala Single Dwelling Protection Bill'. It will be presented in the upcoming assembly session. This is a relief to thousands facing the threat of eviction.

Legal protection is provided with strict conditions in cases where the loan amount is up to 5 lakhs and does not exceed 10 lakhs including fine and penalty interest. Committees and authorities will be formed at the state and district levels to find eligible defaulters. Protection is provided to those who have taken loans from public sector-nationalized banks, cooperative institutions, government-controlled financial institutions like KSFE and KFC. There is no protection for loans from private money transfer and microfinance institutions.

The government will provide money to avoid foreclosure and write off loans to protect the house. A special fund will be formed for this. Money will be provided from the fund for the loans to be written off. The loans, including interest and penalty interest, will be written off.

Foreclosure can be avoided by paying money

• Since banks carry out foreclosure under the central law 'SARFAESI' (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act), foreclosure cannot be stopped by a state law.
• The 'SARFAESI' law passed by the Parliament cannot be overridden by a law passed by the Assembly.
• The government cannot stop foreclosure proceedings. The property can be saved by repaying the loan amount.
• SARFAESI is also applicable to Kerala Bank and Urban Cooperative Bank.

Central approval required: Even if the bill is passed, the Governor will have to send the bill to the President to see if there are any provisions that are against the central law. Further action will be taken after the inspection by the Centre.

Amendment demand rejected by Centre

The Centre had rejected the Assembly resolution demanding an amendment to SARFAESI to prevent the confiscation of land and houses up to five cents.