Relief for common man: State cabinet approves amendment to Revenue Recovery Act

At the extreme of helplessness, there is no greater relief for the common man than securing a loan from the bank to build a house or start a small business by mortgaging a piece of land. Yet, incessant interruptions can lead to arrears and there is no greater grief than receiving a foreclosure notice. If private agencies are tasked with debt collection, it can become a nightmare due to their threats, pressure and harassment.

The recent approval by the state cabinet of a bill to amend the Revenue Recovery Act has been met with great relief and hope by the common people. This bill aims to provide a way for debt-ridden people to manage repayment and delays, thus preventing the desperate situation where foreclosure seems the only option.

The bill will empower the government to intervene in foreclosures by the revenue department on defaulted loans from nationalized, scheduled and commercial banks up to Rs 20 lakh. This measure is intended to prevent the confiscation of houses and agricultural land, particularly for small farmers. Provisions include options for repayment in installments and a non-enforcement clause if the tenant's sole living space is less than one thousand square feet. Another amendment proposes exempting agricultural land up to one acre in rural areas and half an acre in urban areas from confiscation if the loan amount is only up to five lakhs.

Currently, land acquired by the government through revenue recovery is lost to the owner. However, the new law will allow the owner to sell the land while it is still in government possession, upon application to the District Collector by both seller and buyer. The buyer can settle the amount due to the government, including the loan and interest, with any remaining transactions handled directly between seller and buyer.

However, the amendment cannot affect cases where banks operate under the Central Act, SARFAESI. Provisions in the bill are expected to address this limitation.

The government also has the responsibility to ensure that banks recover the full amount due while providing concessions and deferrals to debtors. Banks depend on loan interest for their survival and cannot afford significant losses. The government must balance humane legal systems with the need to ensure banks' financial stability. If banks perceive the new amendment as a financial risk, they may tighten loan conditions, creating further difficulties for the common man.