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Nov 19, 2010, 02.37 PM IST | Source: CNBC-TV18

Govt may amend Sarfaesi Act to help banks recover bad loans

The government is looking to improve the non performing asset recovery mechanism of banks. The Sarfaesi Act which are rules governing loan securitization is likely to see some amendments.

Govt may amend Sarfaesi Act to help banks recover bad loans

Govt looks to strengthen banks ability to recover bad loans

The government is looking to improve the non performing asset recovery mechanism of banks. The Sarfaesi Act which are rules governing loan securitization is likely to see some amendments, reports CNBC-TV18s Gopika Gopakumar

What is the Sarfaesi Act?

These are a set of rules which gives banks the power to take possession of a security and even sell it without going to the court.

The Government of India will soon amend the Sarfesi Act to allow banks to have priority over the tax authorities for proceeds from the sale of assets. Currently, tax authorities like the sales tax authorities are given the first right over proceeds from the sale of securities. But now, the banks will be given more power.

The government will also set up central registry, which will have all the information regarding mortgages in the current year; thereby avoiding duplication of mortgages.  This central registrar will be a public sector company with the government as a major shareholder.

The government will approach the cabinet in few days for approval of the Sarfesi amendments.

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