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Kerala Kaumudi Online
Wednesday, 19 June 2024 6.39 PM IST

Law amendment to happen; government will be able to intervene in foreclosure process of bank

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THIRUVANANTHAPURAM: The government will be empowered to extend bank forfeiture for arrears up to Rs 20 lakh and allow repayment in instalments. The amendment needed for this law to become a reality will be introduced in the next assembly session. Repayment is to be made in 10 instalments. This will bring relief to thousands facing foreclosure.

Arrears above 20 lakhs are to be decided by the Debt Recovery Tribunal. The government can intervene in the foreclosure proceedings conducted by nationalized, scheduled and commercial banks through the Revenue Department. However, the government cannot intervene in cases where the banks have left it to the Central Act SARFAESI. SARFAESI empowers banks to recover bad loans above Rs 1 lakh without the intervention of a court or tribunal.

The government used to grant concessions when banks approached executive magistrates seeking sanction for foreclosure. The High Court ruled that this was illegal in a case of the banks in 2019. The order said that ministers and departmental secretaries have no authority to grant stay or allow instalments in arrears. The appeal was also unsuccessful. It was decided to amend the law after this. Tens of thousands of applications are pending with the government seeking exemptions. The Law Department will finalize the draft bill prepared by the Revenue Department. The Revenue Minister will present it in the House.

Authority from Tehsildar

Tehsildar, Collector, Ministers and Chief Minister will be empowered to waive foreclosure depending on the level of arrears. Tehsildar can permit instalments in arrears up to two and a half lakhs. Up to 5 lakhs by the Collector and Ministers, up to 10 lakhs by the Finance Minister and the Chief Minister can permit instalments in arrears up to 20 lakhs.

Moratorium not good

The government can announce a moratorium on loan repayments but only that the due date will be extended. The amount must be repaid along with the interest for the extended period at the end of the term.

The government is trying to make the banks take a sympathetic stance regarding loan repayment.

-KN Balagopal

Finance Minister of Kerala (said in the assembly)

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