Banks asked to set up one platform for sale of loan defaulters’ assets

New Delhi: Strengthening another channel for recovery of dues by the public sector ba­nks (PSBs), the government on Tuesday asked lenders to set up a common platform for auctioning defaulters’ seized properties to attract competitive bids and increase recoveries from sales.

PSBs, along with the Indi­an Banks’ Association, are in the process of launching an e-auction platform for st­andardising details of properties to be auctioned, financial services secretary Rajiv Kumar said. The platform may be ready in two-three months, he added.

“In the absence of modern techniques, positive results accruing from property auctions were limited and potential buyers were not fully informed of details like those available in e-auction marketplace,” according to a statement by the department of financial services.

Banks display auction information on their own websites and bidders are forced to visit mu­ltiple websites. It leads to a smaller pool of pote­ntial bidders, cartelisation as well as involves costs for conducting repeated auctio­ns, the statement said. The platform, it said, will enlarge the bidder base and will have visible auction information on all PSBs’ websites.

For de-clogging debt recovery tribunals, the threshold for filing a case before DRTs has been increased to Rs 20 lakh from Rs 10 lakh, Kumar said. Cases between Rs 10 lakh and Rs 20 lakh account for 38 per cent of the applications and are only 4 per cent in terms of value, Kumar added.

As on June 30, there were 38,376 cases that fell in the bracket, he said, without disclosing the amounts invol­v­ed in these matters. The revision of the minimum limit will help DRTs to focus on high-value cases and lead to quicker recoveries. About 80-85 per cent of non-performing asset (NPA) cases between Rs 10 lakh and Rs 20 lakh are fully secured, the statement said.

“Data indicates that 80-85 per cent of NPA cases in the range of Rs 10-20 lakh are fully secured. For their recovery, lenders can take action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act),” he said. District magistrates are re­quired to pass orders on se­i­zure of secured assets against defaulted loans given by banks within 60 days, the statement said. The SARFAESI Act, it said, empowers banks to take possession of securitised assets of defaulters and sell them.

The government also has asked states’ chief secretaries to monitor passing of orders by district magistrates within the prescribed time limit, he said adding over 10,000 applications of PSBs are pending adding value of properties from these cases is around Rs 40,000 crore.