Some bankers suggest Reserve Bank of India (RBI) to bring about enabling framework for effective implementation of SARFAESI Act.
Bankers argue that despite the existence of this act, they face difficulties at the field level in taking physical possession of mortgaged properties from defaulting borrowers owing to administrative loopholes.
Owing to the slowdown in the economy and rise in interest rates, many corporate borrowers are finding it difficult to service their debt leading to defaults.
Bankers fear that defaulters continue to use the loopholes in the administrative and legal framework and make mockery of the system.
Meanwhile, in a bid to check rise in bad loans in the future, the RBI proposed to collect credit data and examine large common exposures across banks to create a central repository on large credits.
Gross non performing asset (NPA) rose to 3.9 per cent in June and this is estimated to rise 4.4 per cent if the macro-economic situation does not improve. Besides, banks are sitting on a pile of restructured loans.
The Corporate Debt Restructuring Cell has approved 415 accounts amounting to Rs 2.5 lakh crore in the past eight years.