Amid increasing cases of harassment by loan recovery agents, a private members bill has been moved in the Lok Sabha to put a break on the "unethical and illegal" practice by proposing amendments to existing law.
RSP MP N K Premachandran has tabled the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Amendment Bill) on Friday seeks protection for "students, parents, farmers, senior citizens, differently abled persons, persons with small holdings and such other weaker sections" from harassment.
At present, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 provides for speed up the recovery of defaulting loans and mounting levels of non-performing assets of banks and financial institutions.
Banks and financial institutions seek the support of private agencies to recover these loans and the latter are using "unethical and illegal means for recovery of the debts" for the recovery of money from the weaker sections of the society.
There were several incidents in the past where recovery agents have harassed those defaulted in repayments and in some cases, people have committed suicide too. Last year in Bengaluru's Rajarajeshwarinagar area, a bus with 42 passengers was hijacked by recovery agents to ensure that the travel agency owning the vehicle pay loan dues.
According to the Statement of Objects and Reasons of Premachandran's Bill, "the interventions and interference of private agencies and implementation of provisions of this Act through unethical and illegal means (are) creating unrest in the society particularly among the weaker sections. The weaker sections of society become homeless due to the implementation of the provisions of this Act."
At present, banks and financial institutions can invoke the provisions of the Act if the security interest for securing the repayment of any financial asset is above Rs one lakh. Premachandran wants this limit to be increased to Rs 10 lakh.
Besides, the Bill seeks that the Act should not be invoked against those who took loans for educational purpose, farm loans up to Rs 20 lakh, loans for self employment up to Rs 20 lakh, loans taken by senior citizens, widows and differently-abled persons with more than 60% disabilities up to Rs 15 lakh and loans taken by HIV/AIDS patients or those undergoing organ transplant among others.