Minister Hints At Major Banking Reforms Email this page
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New Delhi, Nov. 11 (NNN): As part of the far-reaching banking reforms, Union Finance Minister P Chidambaram on Thursday announced a slew of legislations would be brought in during the winter session of Parliament, including amendments to the NPA Act and regulation of credit information companies.
The minister also threatened to bring in a legislation on lenders' liability if the banks did not adhere to the Reserve Bank's "fair practices" code on keeping privacy of information about the borrowers.

Addressing the bankers' conference 'Bancon', Chidambaram said: "Certain amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act have been necessitated. The Bill has been finalised and we hope to effect the amendments speedily."

Asserting that information was vital to credit quality, Chidambaram said it would not only do away with the hassles for the borrowers but also help banks in speedy appraisals.

"A well-established credit information system will also minimise financial frauds, which can become problematic for certain kinds of loans, especially home loans," he said.

In order to improve credit climate, the Minister said "we propose to bring about a law to provide legal sanctions for collection, sharing and regulated dissemination of credit information."

Elaborating on lenders' liability, Chidambaram feared banks may "intrude" upon citizens' privacy and said there was an equal obligation to ensure proper customer service.

He said many of the borrowers, especially self-help groups and those seeking PMRY, were not informed about the interest rate being charged.

In many countries, banks are mandated by law to respect the rights and interests of lenders, depositors and the other customers. There is a demand for similar law in India, the Finance Minister said.

The minister said that the proposed amendments were aimed at dissuading borrowers from adopting "dilatory" tactics and enabling creditors to effect speedy recovery.

"Along with the strengthening of SARFAESI Act, we propose to bring Credit Information Companies Regulation Bill in the winter session of Parliament," he added.

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