The Indian financial sector recently received a fillip with the enactment of the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012. The act aims to remove some bottlenecks observed in the existing regulatory framework for recovery of non-performing assets (NPAs), namely the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act), and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
This article describes some of the key measures introduced by the 2012 act.
Co-operative gains
The act includes multi-state co-operative banks (MSCBs) within the ambit of “bank” as defined by the RDB and the SARFAESI acts. This amendment was required in light of a contrary ruling by the Supreme Court of India in Greater Bombay Co-operative Bank Limited v MS United Yarn Textiles Private Limited.
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Sawant Singh is a partner, Aditya Bhargava is a senior associate, and Davis Kanjamala is an associate at the Mumbai office of Phoenix Legal.
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