Thiruvananthapuram: Amid rage over a bank's loan recovery proceedings that forced a woman and her daughter here to kill themselves, Kerala government's bid to save the common man from a draconian national law, which allows banks and other financial institutions to recover property from borrowers, has not yielded any results so far. Meanwhile, a council appointed by the Kerala Legislative Assembly to look into the problems faced by people due to this law -- SARFAESI Act -- is ineffective.
Banks have reportedly ignored Kerala government's opposition to the stringent Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act passed by the Vajpayee Government in 2002 to speed up the recovery process.
The Kerala Legislative Assembly had on August 21, 2017, passed a resolution urging the Centre to amend the SARFAESI Act of 2002 so as to exempt plots not exceeding five cents with the house from recovery.
An exemption was also sought for those who have taken agricultural loan up to Rs 5 lakh in such a way that land up to 1 acre in rural areas and 50 cents in urban areas are not recovered.
However, the State-Level Bankers' Committee opposed this move at a meet on October 5. They argued it was not practical to implement the government's instruction as it is.
The bankers said categories who should not be considered for exemption are those who pay income tax, families holding ration cards marked Above Poverty Line, people with huge assets or those having such assets in the name of their spouses and people engaged in high-paying jobs.
The Committee also said the proposed concession should not have retrospective effect.
However, the efforts to bring about a gentle bank recovery mechanism failed as the government rejected the demands of the Committee and the latter too refused to back down.
As the SARFAESI Act is a Central law, the bankers were aware that the state assembly resolution would not have any impact on it.
Though the bankers took a lenient approach after government's instructions initially, they returned to take more stringent action as per the SARFAESI Act.
Assembly-appointed council
Speaker Sreeramakrishnan had appointed an 11-member council led by S Sharma, MLA, on December 13, 2018, and asked it to submit a report on the problems faced by borrowers under the SARFAESI Act.
The panel was asked to study the situation in the state wherein those who had taken bank loans by pledging their properties were facing recovery proceedings as per the SARFEASI Act.
The report has to submit within six months. Even after five months of its formation, the council has only met once. The members claimed that they could not hold a meeting due to the election model code of conduct.
SARFAESI ACT
The Act allows banks to sell their non-performing assets to Asset Reconstruction Companies (ARCs) after taking over the collateral property of the borrower. It empowers banks to recover the pledged property in case of non-payment of interest for more than three months and auction it. The law is applicable to all loans except those less than Rs 1 lakh and those with no collateral.
On Tuesday, a 44-year-old woman and her teenaged daughter committed suicide in Neyyattinkara on the outskirts of Thiruvananthapuram fearing that their house would be taken over by Canara Bank for failing to repay a housing loan taken 16 years ago.
