2023-08-11 19:19:57
The letter follows an increasing number of criminal cases once morest lenders, which are aimed to intimidate and stall recovery efforts. The industry has raised concerns over criminal action once morest ARC officials despite their merely following due process of law as mandated in IBC and Sarfaesi.
Under Section 32 of the Sarfaesi Act, lenders have been given protection for action taken in good faith. It specifies that no suit, prosecution, or other proceeding can lie once morest the Reserve Bank, Central Registry, or any secured creditor or any of its officers for anything done under provisions of Sarfaesi.
Despite this, creditors are being implicated in various criminal charges by borrowers and related vested interests to delay and derail the recovery process and create a sense of fear in follow up and recovery of bad loans and pressurise the ARCs.
In keeping with the spirit of this provision, ARCs want the government to issue appropriate advisory to relevant authorities to exercise restraint in initiating criminal cases once morest individual employees of creditors who are merely following a permissible recovery mechanism in compliance with law. However, only when mala fide intent and criminality in conduct of the officials or the institution is established beyond doubt, a criminal case once morest an institution or individual pursuing legitimate avenues of recovery or resolution should be filed.
The industry believes that its focus on value maximisation ultimately benefits the financial ecosystem. A healthy credit culture can develop only with a robust recovery framework. The move is reportedly triggered by the recent police action on officials of Edelweiss group, said two sources.
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