Recovery blues: Banks scouting for professional agents

If anybody was thinking that state-run banks would be rejoicing over the fact that it is bonanza time given the chance to seize and recover ...

If anybody was thinking that state-run banks would be rejoicing over the fact that it is bonanza time given the chance to seize and recover thousands crore of dues under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Ordinance (2002), they may just be wrong. Non-performing asset (NPA) blues will continue to haunt these banks in a different kind of way. The sixty-day period after which bankers have to take possession of a defaulter’s asset as provided in the re-promulgated Ordinance is all set to an end shortly, but bank have no definite idea as to how to go about handling crores of assets post-seizure.

Giving voice to this new dilemma, a top official at the country’s largest bank, State Bank of India, which has sent almost 50-60 notices to big-time defaulters, said: “We bankers are not custodians or merchants of commodities. It is going to be a complicated task seizing assets, guaranteeing their safety and security when it is in bank’s custody and realising their value by disposing them at the right value… how can you just enter somebody’s premises without creating any law and order problem? We have to take the help of magistrate and police for this”.

The SBI has formed a special committee under a chief general manager to chalk out its post-seizure strategy. Agreed another top official at Bank of Baroda, who said that it is not an easy task to handle a complicated situation like this. The bank also has formed a cell to deal with the situation. SBI, on its part is making efforts to find a way out by hiring for the first time professional agencies which have both the muscle power as well as the network to handle the situation. ‘We have to take help of professional auctioneers to dispose off the huge quantity of goods seized’, an SBI official said.

Story continues below this ad

State Bank, along with IDBI and other banks is trying to map out a common strategy to deal with the post-seizure situation. ‘A joint strategy to deal with the same defaulter or dealing with the same kind of assets are being discussed at the moment’, an State Bank of India official said.

Top bankers have already held several rounds of discussions and would like to frame certain guidelines for seizure-relocated issues. These bankers have sent seizure notices to over 1,000 defaulters.

The concept of ‘designated secured creditor’ is to be adopted and the creditor with the largest outstanding exposure and NPA on its books will play this role. All other secured creditors will authorise the ‘designated secured creditor’ to act on their behalf to exercise the power given under the Ordinance.

It is also agreed that information will be shared among other participants if the borrower approaches one of them for a settlement; and a unified approach will be adopted while contesting litigation filed by borrowers.

Story continues below this ad

Meanwhile, some of the defaulters have not stopped seeking shelter in the legal web to ward off the impending threat of seizure. According to bankers, the Modern group has already approached the courts on the issue.

H-1B $100,000 entry fee explained: Who pays, who’s exempt, and what’s still unclear?

Explained2 hr ago

The White House's decision to impose a $100,000 entry fee on H-1B visa holders has sparked worry among Indian tech workers and students. While uncertainties remain about its implementation and exemptions, major tech companies have cautioned employees against traveling. The policy could lead to a shift towards other visa categories and potentially change the STEM immigration pipeline.

View all shorts

Live Blog