WELCOMEWELCOME

LEGAL ASPECTS LEGAL ASPECTS OF OF

ADVANCESADVANCES

STATE BANK LEARNING CENTRE, RANCHISTATE BANK LEARNING CENTRE, RANCHI

ISSUES FOR DISCUSSIONISSUES FOR DISCUSSION

• TYPES OF BORROWERSTYPES OF BORROWERS

• DOCUMENTATIONDOCUMENTATION

• STAMP DUTYSTAMP DUTY

• MORTGAGE & OTHER SECURITIESMORTGAGE & OTHER SECURITIES

• REGISTRATION OF CHARGEREGISTRATION OF CHARGE

• LIMITATION ACTLIMITATION ACT

• LEGAL OPTIONS FOR RECOVERY OF LEGAL OPTIONS FOR RECOVERY OF NPAsNPAs

BORROWERSBORROWERS

•COMPANIESCOMPANIESLEGAL ENTITY-DISTINCT FROM ‘OWNERS’ LEGAL ENTITY-DISTINCT FROM ‘OWNERS’

OR SHAREHOLDERS; PERPETUAL OR SHAREHOLDERS; PERPETUAL SUCCESSION; LIMITED LIABILITY OF SUCCESSION; LIMITED LIABILITY OF SHAREHOLDERS; COMMON SEAL; SHAREHOLDERS; COMMON SEAL; GOVERNED BY THE INDIAN COMPANIES ACT GOVERNED BY THE INDIAN COMPANIES ACT 19561956

u/s 11 :REGISTRATION REQUIREMENTSu/s 11 :REGISTRATION REQUIREMENTS (BANKING BUSINESS >10 PERSONS; OTHER (BANKING BUSINESS >10 PERSONS; OTHER

BUSINESS>20 PERSONS) BUSINESS>20 PERSONS)

COMPANIESCOMPANIES

PRIVATE LTD. CO.PRIVATE LTD. CO. (u/s 3(1)(iii));MIN. (u/s 3(1)(iii));MIN. MEMBERS 2,MAX 50.MIN DIRECTORS MEMBERS 2,MAX 50.MIN DIRECTORS 2;SHARES CANNOT BE TRANSFERRED TO 2;SHARES CANNOT BE TRANSFERRED TO THIRD PARTIES WITHOUTTHECONSENT OF THIRD PARTIES WITHOUTTHECONSENT OF OTHER SHAREHOLDERSOTHER SHAREHOLDERS

PUBLIC LTD.COPUBLIC LTD.CO. MIN MEMBERS 7, MIN . MIN MEMBERS 7, MIN DIRECTORS 3DIRECTORS 3

NON-LIMITED COMPANIESNON-LIMITED COMPANIES

COMPANIESCOMPANIES CERTIFICATE OF INCORPORATION OR (both In Pvt Ltd CERTIFICATE OF INCORPORATION OR (both In Pvt Ltd

and Public Ltd Company)and Public Ltd Company) DOCTRINE OF CONSTRUCTIVE NOTICEDOCTRINE OF CONSTRUCTIVE NOTICE MEMORANDUM OF ASSOCIATIONMEMORANDUM OF ASSOCIATION (OBJECT CLAUSE;MAIN OBJECTS;ANCILLARY (OBJECT CLAUSE;MAIN OBJECTS;ANCILLARY

OBJECTS;OTHER OBJECTS)OBJECTS;OTHER OBJECTS) SHAREHOLDERS CAN AMEND THE OBJECT CLAUSESHAREHOLDERS CAN AMEND THE OBJECT CLAUSE ARTICLES OF ASSOCIATION OR ARTICLES OF ASSOCIATION OR

DOCTRINE OF INDOOR MANAGEMENTDOCTRINE OF INDOOR MANAGEMENT CERTIFICATE OF COMMENCEMENT OF BUSINESSCERTIFICATE OF COMMENCEMENT OF BUSINESS

only in Public Limited Companyonly in Public Limited Company DOCTRINE OF DOCTRINE OF ULTRA VIRES – any action against ULTRA VIRES – any action against

memorandum of association can not be memorandum of association can not be rectified at a later date even by Genl Body rectified at a later date even by Genl Body Meeting.Meeting.

COMMON SEAL- an identity & signature of companyCOMMON SEAL- an identity & signature of company

PARTNERSHIPSPARTNERSHIPSDESCRIBED UNDER SEC 4 OF INDIAN DESCRIBED UNDER SEC 4 OF INDIAN

PARTNERSHIP ACT. NO WRITTEN DEED PARTNERSHIP ACT. NO WRITTEN DEED NECESSARY BECAUSE AS PER LAW A NECESSARY BECAUSE AS PER LAW A PARTNERSHIP CAN ALSO BE AN ORAL PARTNERSHIP CAN ALSO BE AN ORAL AGREEMENT.AGREEMENT.

ALL PARTNERS ARE JOINTLY, SEVERALLY ALL PARTNERS ARE JOINTLY, SEVERALLY AND CO-EXTENSIVELY LIABLE FOR ALL AND CO-EXTENSIVELY LIABLE FOR ALL ACTS OF THE FIRMACTS OF THE FIRM

BANKS ASK FOR A REGISTERED DEED OF BANKS ASK FOR A REGISTERED DEED OF PARTNERSHIP AS WELL AS PERSONAL PARTNERSHIP AS WELL AS PERSONAL GUARANTEE OF ALL PARTNERSGUARANTEE OF ALL PARTNERS

PARTNERSHIPSPARTNERSHIPSA MINOR HAS TO DECLARE WITHIN 6 A MINOR HAS TO DECLARE WITHIN 6

MONTHS OF BECOMING A MAJOR OR MONTHS OF BECOMING A MAJOR OR LEAVE; ELSE HE WILL BE DEEMED TO LEAVE; ELSE HE WILL BE DEEMED TO HAVE JOINED THE PARTNERSHIP AND WILL HAVE JOINED THE PARTNERSHIP AND WILL BE LIABLE RETROSPECTIVELY.BE LIABLE RETROSPECTIVELY.

LEGAL HEIRS OF A DECEASED PARTNER LEGAL HEIRS OF A DECEASED PARTNER ARE NOT PERSONALLY LIABLEARE NOT PERSONALLY LIABLE

A FIRM IS BOUND BY ALL THE ACTS OF A A FIRM IS BOUND BY ALL THE ACTS OF A PARTNER DONE IN THE USUAL COURSE OR PARTNER DONE IN THE USUAL COURSE OR WAY OF THE FIRM’S BUSINESSWAY OF THE FIRM’S BUSINESS

SOCIETIESSOCIETIES• ONLY A REGISTERED SOCIETY ATTAINS A ONLY A REGISTERED SOCIETY ATTAINS A

SEPARATE IDENTITY AND CAN BE SUEDSEPARATE IDENTITY AND CAN BE SUED• 60 DAYS’ NOTICE u/s 126 OF THE CO-60 DAYS’ NOTICE u/s 126 OF THE CO-

OPERATIVE SOCIETY ACT IS REQUIRED OPERATIVE SOCIETY ACT IS REQUIRED FOR FILING A SUIT AGAINST A SOCIETYFOR FILING A SUIT AGAINST A SOCIETY

• CONSTITUTION & BYE LAWS SHOULD BE CONSTITUTION & BYE LAWS SHOULD BE CAREFULLY EXAMINEDCAREFULLY EXAMINED

• WHETHER AFFILIATED TO ANY OTHER WHETHER AFFILIATED TO ANY OTHER SOCIETYSOCIETY

• RESOLUTION AUTHORISING BORROWING RESOLUTION AUTHORISING BORROWING OR OPERATION OF ACCOUNT OR OPERATION OF ACCOUNT REQUIRED.OBTAIN PERSONAL REQUIRED.OBTAIN PERSONAL GUARANTEE OF ALL OFFICE BEARERSGUARANTEE OF ALL OFFICE BEARERS

DOCUMENTATIONDOCUMENTATION

PROPER DOCUMENTS TO BE EXECUTED IN PROPER DOCUMENTS TO BE EXECUTED IN A PROPER MANNER BY THE PERSONS A PROPER MANNER BY THE PERSONS AUTHORISED THEREFORAUTHORISED THEREFOR

INCOMPLETE DOCUMENTS ARE LIKELY TO INCOMPLETE DOCUMENTS ARE LIKELY TO BE TERMED AS ‘UNRELIABLE’ AND ‘NOT BE TERMED AS ‘UNRELIABLE’ AND ‘NOT ADMISSIBLE AS EVIDENCE’ADMISSIBLE AS EVIDENCE’

INTERESTINTEREST

FUTURE RATE OF INTERESTFUTURE RATE OF INTEREST

DOCUMENTATIONDOCUMENTATION

PROVISO - I SECTION 34 OF CPC PROVISO - I SECTION 34 OF CPC FUTURE FUTURE RATE OF INTEREST CAN BE BROUGHT RATE OF INTEREST CAN BE BROUGHT DOWNDOWN

PROVISO IIPROVISO II AGREED RATE OF INTEREST AGREED RATE OF INTEREST TO BE APPLIED IN COMMERCIAL TO BE APPLIED IN COMMERCIAL TRANSACTIONTRANSACTION

PROVISO IIIPROVISO III IF THERE IS NO AGREED IF THERE IS NO AGREED RATE,THEN MAX 12 % SIMPLE RATE OF RATE,THEN MAX 12 % SIMPLE RATE OF INTEREST MAY BE AWARDEDINTEREST MAY BE AWARDED

DOCUMENTATIONDOCUMENTATION

• WHO SHOULD FILL THE DOCUMENTSWHO SHOULD FILL THE DOCUMENTS PREFERABLY THE PERSON WHO HAS PREFERABLY THE PERSON WHO HAS

FILLED THE REST OF THE DOCUMENT FILLED THE REST OF THE DOCUMENT OR A PERSON WHO WAS ATTACHED TO OR A PERSON WHO WAS ATTACHED TO THE BRANCH AT THE MATERIAL TIME THE BRANCH AT THE MATERIAL TIME

A DOCUMENT WITH GAPS / BLANKS, IF A DOCUMENT WITH GAPS / BLANKS, IF MENTIONED IN THE PLAINT, MAY BE MENTIONED IN THE PLAINT, MAY BE ADMITTED AS SECONDARY EVIDENCEADMITTED AS SECONDARY EVIDENCE

STAMP DUTYSTAMP DUTY

• LEGAL REQUIREMENTLEGAL REQUIREMENT• INDIAN STAMP ACT 1899 REQUIRES THAT INDIAN STAMP ACT 1899 REQUIRES THAT

DOCUMENTS SPECIFIED IN ENTRY 91 OF DOCUMENTS SPECIFIED IN ENTRY 91 OF UNION LIST SHOULD BE PROPERLY STAMPEDUNION LIST SHOULD BE PROPERLY STAMPED

• AN UNSTAMPED OR UNDERSTAMPED AN UNSTAMPED OR UNDERSTAMPED DOCUMENT MAY BE PRODUCED BEFORE THE DOCUMENT MAY BE PRODUCED BEFORE THE REGISTRAR OF ASSURANCES;ELSE, SUIT MAY REGISTRAR OF ASSURANCES;ELSE, SUIT MAY BE FILED WITH A REQUEST TO THE COURT TO BE FILED WITH A REQUEST TO THE COURT TO SEND THE DOCUMENT TO ROA FOR PROPER SEND THE DOCUMENT TO ROA FOR PROPER STAMPING.STAMPING.

• STAMPS AFFIXED AFTER DATE OF EXECUTION STAMPS AFFIXED AFTER DATE OF EXECUTION ARE NOT ADMISSIBLEARE NOT ADMISSIBLE

STAMP DUTYSTAMP DUTY• ANY INSTRUMENT DRAWN AND EXECUTED ANY INSTRUMENT DRAWN AND EXECUTED

OUTSIDE INDIA MUST BE STAMPED WITHIN OUTSIDE INDIA MUST BE STAMPED WITHIN THREE MONTHS OF ENTRY IN INDIATHREE MONTHS OF ENTRY IN INDIA

• UNSTAMPED OR UNDERSTAMPED UNSTAMPED OR UNDERSTAMPED D.P.NOTES AND BILLS OF EXCHANGE D.P.NOTES AND BILLS OF EXCHANGE CANNOT BE ‘CORRECTED’ EVEN IF THE CANNOT BE ‘CORRECTED’ EVEN IF THE PENALTY IS PAID.PENALTY IS PAID.

• ADHESIVE STAMPS CAN BE AFFIXED ONLY ADHESIVE STAMPS CAN BE AFFIXED ONLY IF THE DOCUMENT IS PRINTED.ADHESIVE IF THE DOCUMENT IS PRINTED.ADHESIVE STAMPS MUST BE DULY CANCELLED STAMPS MUST BE DULY CANCELLED

• STAMP PAPER MUST BE PURCHASED IN THE STAMP PAPER MUST BE PURCHASED IN THE NAME OF ONE OF THE PARTIES TO THE NAME OF ONE OF THE PARTIES TO THE CONTRACT CONTRACT

SECURITYSECURITYMORTGAGEMORTGAGESEC 58 OF T.P.ACTSEC 58 OF T.P.ACT

SIMPLE,ENGLISH,EQUITABLE, SIMPLE,ENGLISH,EQUITABLE, OWNERSHIP OWNERSHIP FREE HOLD, LEASE HOLD, FREE HOLD, LEASE HOLD,

GOVERNMENT OWNEDGOVERNMENT OWNED ANY RESTRICTIVE CLAUSES ?ANY RESTRICTIVE CLAUSES ?CASE OF ADVERSE POSSESSION ?CASE OF ADVERSE POSSESSION ?T I T L E – CLEAR, MARKETABLE, CHAIN-T I T L E – CLEAR, MARKETABLE, CHAIN-

completecompleteSEARCH REPORTSEARCH REPORT

MORTGAGEMORTGAGEIN THE CASE OF A LIMITED CO., IN THE CASE OF A LIMITED CO.,

RESOLUTION TO BE PASSED IN THE RESOLUTION TO BE PASSED IN THE GENERAL BODY MEETING TO CREATE GENERAL BODY MEETING TO CREATE MORTGAGE ON THE CO’S PROPERTY.MORTGAGE ON THE CO’S PROPERTY.

ANOTHER RESOLUTION TO BE PASSED ANOTHER RESOLUTION TO BE PASSED BY THE BOARD AUTHORISING A BY THE BOARD AUTHORISING A REPRESENTATIVE OF THE CO TO REPRESENTATIVE OF THE CO TO CREATE THE MORTGAGE BY DEPOSIT CREATE THE MORTGAGE BY DEPOSIT OF THE TITLE DEEDSOF THE TITLE DEEDS

IF LAND IS OWNED BY A TRUST, IF LAND IS OWNED BY A TRUST, TRUSTEES MUST HAVE THE RIGHT TO TRUSTEES MUST HAVE THE RIGHT TO MORTGAGE THE TRUST’S PROPERTYMORTGAGE THE TRUST’S PROPERTY

SECURITYSECURITY

PLEDGEPLEDGEDEFINED u/s 172 OF INDIAN CONTRACT DEFINED u/s 172 OF INDIAN CONTRACT

ACT.PLEDGEE HAS THE RIGHT TO ACT.PLEDGEE HAS THE RIGHT TO POSSESSION.POSSESSION.

REASONABLE NOTICE u/s 176 REQUIRED REASONABLE NOTICE u/s 176 REQUIRED TO BE GIVEN TO THE BORROWER TO BE GIVEN TO THE BORROWER BEFORE SELLING THE PLEDGED BEFORE SELLING THE PLEDGED GOODS.BANK IS LIABLE u/s 151 TO TAKE GOODS.BANK IS LIABLE u/s 151 TO TAKE GOOD CARE OF THE SEIZED GOODSGOOD CARE OF THE SEIZED GOODS

SECURITYSECURITYHYPOTHECATIONHYPOTHECATION RIGHTS CAN BE EXERCISED THROUGH A RIGHTS CAN BE EXERCISED THROUGH A

COURT OF LAWCOURT OF LAWHYPOTHECATION IS NOT DEFINED HYPOTHECATION IS NOT DEFINED IT IS A NOTIONAL,SPECIAL AND IT IS A NOTIONAL,SPECIAL AND

EQUITABLE CHARGEEQUITABLE CHARGEBORROWER IS FREE TO SELL THE BORROWER IS FREE TO SELL THE

HYPOTHECATED GOODS HYPOTHECATED GOODS PROVISIONS OF T.P.ACT AND CONTRACT PROVISIONS OF T.P.ACT AND CONTRACT

ACT NOT APPLICABLEACT NOT APPLICABLE

SECURITYSECURITY• LIENLIENRIGHT TO RETAIN PROPERTY TILL RIGHT TO RETAIN PROPERTY TILL

PAYMENT OF DEBT. BANKER’S LIEN u/s PAYMENT OF DEBT. BANKER’S LIEN u/s 171 OF THE INDIAN CONTRACT ACT IS A 171 OF THE INDIAN CONTRACT ACT IS A ‘WITHOUT LIMITATION’ IMPLIED PLEDGE‘WITHOUT LIMITATION’ IMPLIED PLEDGE

• SET OFFSET OFFSTATUTORY RIGHT,REQUIRES PRIOR STATUTORY RIGHT,REQUIRES PRIOR

NOTICE. BANK CANNOT SET OFF NOTICE. BANK CANNOT SET OFF BALANCE IN BORROWER’S JOINT BALANCE IN BORROWER’S JOINT ACCOUNT WITH ANOTHER PERSON TO ACCOUNT WITH ANOTHER PERSON TO LIQUIDATE DEBT OUTSTANDING IN THE LIQUIDATE DEBT OUTSTANDING IN THE BORROWER’S NAME BORROWER’S NAME

REGISTRATION OF CHARGEREGISTRATION OF CHARGE(IN CASE OF COMPANIES)(IN CASE OF COMPANIES)CHARGE DEFINED u/s 100 OF T.P.ACT (NOT CHARGE DEFINED u/s 100 OF T.P.ACT (NOT

DEFINED IN COMPANIES ACT)DEFINED IN COMPANIES ACT)FLOATING CHARGE; FIXED CHARGEFLOATING CHARGE; FIXED CHARGEHYPOTHECATION, MORTGAGE, HIRE PURCHASE HYPOTHECATION, MORTGAGE, HIRE PURCHASE

REQUIRE REGISTRATION BUT NOT THE CHARGE REQUIRE REGISTRATION BUT NOT THE CHARGE OF PLEDGE OF PLEDGE

FILING OF PARTICULARS OF CHARGE – FORMS FILING OF PARTICULARS OF CHARGE – FORMS MUST BE SIGNED BY BOTH, THE CO’S MUST BE SIGNED BY BOTH, THE CO’S AUTHORISED OFFICIAL(S) AND THE CHARGE AUTHORISED OFFICIAL(S) AND THE CHARGE HOLDERHOLDER

WHENEVER TERMS & CONDITIONS, EXTENT OR WHENEVER TERMS & CONDITIONS, EXTENT OR OPERATION OF ANY CHARGE IS MODIFIED, OPERATION OF ANY CHARGE IS MODIFIED, SUCH MODIFICATION IS ALSO REQUIRED TO BE SUCH MODIFICATION IS ALSO REQUIRED TO BE REGISTEREDREGISTERED

REGISTRATION OF CHARGEREGISTRATION OF CHARGE(IN CASE OF COMPANIES)(IN CASE OF COMPANIES)

• FORMSFORMSFORM 8FORM 8 REGISTRATION/MODIFICATION REGISTRATION/MODIFICATION

OF CHARGEOF CHARGEFORM 13FORM 13 REGISTER OF CHARGESREGISTER OF CHARGESFORM 17FORM 17 SATISFACTION OF CHARGESATISFACTION OF CHARGEFORM 18FORM 18 CHANGE OF SITUATION OFCHANGE OF SITUATION OF

OFFICEOFFICEFORM 32FORM 32 APPOINTMENT/CHANGE OF APPOINTMENT/CHANGE OF

DIRECTORSDIRECTORS

IMPORTANT SECTIONS OF IMPORTANT SECTIONS OF COMPANIES ACTCOMPANIES ACT• SEC 124SEC 124 CHARGE TO INCLUDE MORTGAGE CHARGE TO INCLUDE MORTGAGE• SEC 125SEC 125 CHARGE VOID IF NOT REGISTERED CHARGE VOID IF NOT REGISTERED

(PARTICULARS OF CHARGE MUST BE FILED (PARTICULARS OF CHARGE MUST BE FILED WITHIN 30 DAYS OF THE CREATION OF WITHIN 30 DAYS OF THE CREATION OF CHARGE)CHARGE)

• SEC 126SEC 126 DATE OF NOTICE OF CHARGE DATE OF NOTICE OF CHARGE• SEC 127SEC 127 MODIFICATION OF CHARGE IN MODIFICATION OF CHARGE IN

RESPECT OF PROPERTIES ACQUIRED SUBJECT RESPECT OF PROPERTIES ACQUIRED SUBJECT TO CHARGETO CHARGE

• SEC 130SEC 130 REGISTER OF CHARGES TO BE KEPT REGISTER OF CHARGES TO BE KEPT BY THE REGISTRAR OF COMPANIESBY THE REGISTRAR OF COMPANIES

• SEC 135SEC 135 MODIFICATION OF CHARGE MODIFICATION OF CHARGE• SEC 136SEC 136 COPY OF INSTRUMENTS CREATING COPY OF INSTRUMENTS CREATING

CHARGE TO BE KEPT AT COMPANY’S OFFICECHARGE TO BE KEPT AT COMPANY’S OFFICE

IMPORTANT SECTIONS OF IMPORTANT SECTIONS OF COMPANIES ACTCOMPANIES ACT• SEC 138 – 140SEC 138 – 140 SATISFACTION OF SATISFACTION OF

CHARGE.CHARGEHOLDER HAS A DUTY TO INFORM CHARGE.CHARGEHOLDER HAS A DUTY TO INFORM ROC WITHIN 30 DAYS OF SATISFACTION OF ROC WITHIN 30 DAYS OF SATISFACTION OF CHARGECHARGE

• SEC 141SEC 141 POWER OF COMPANY LAW BOARD TO POWER OF COMPANY LAW BOARD TO AMEND THE REGISTER OF CHARGESAMEND THE REGISTER OF CHARGES

• SEC 142SEC 142 PENALTY PENALTY• SEC 149(2ASEC 149(2A) RESTRICTIONS ON COMMENCEMENT ) RESTRICTIONS ON COMMENCEMENT

OF BUSINESSOF BUSINESS• SEC 292SEC 292 POWER OF THE BOARD TO BORROW POWER OF THE BOARD TO BORROW• SEC 293(i) (a)SEC 293(i) (a) SHAREHODERS’ RESOLUTION OF SHAREHODERS’ RESOLUTION OF

THE PUBLIC LTD CO.TO BACK THE MORTGAGE OF THE PUBLIC LTD CO.TO BACK THE MORTGAGE OF THE PROPERTY OF THE COMPANYTHE PROPERTY OF THE COMPANY

• SEC 293(i)(d)SEC 293(i)(d) RESOLUTION TO BE PASSED BY RESOLUTION TO BE PASSED BY SHAREHOLDERS IF THE AMOUNT OF LOAN SHAREHOLDERS IF THE AMOUNT OF LOAN >PUC+FREE RESERVES>PUC+FREE RESERVES

REMEMBERREMEMBER• SURETY HAS THE RIGHT TO BENEFIT OF SECURITY SURETY HAS THE RIGHT TO BENEFIT OF SECURITY

SEC 139 & 141 OF INDIAN CONTRACT ACT SEC 139 & 141 OF INDIAN CONTRACT ACT • POWER OF ATTORNEYPOWER OF ATTORNEY CHECK IF THE PRINCIPAL CHECK IF THE PRINCIPAL

(ASSIGNOR) HIMSELF HAS THE POWER THAT HE (ASSIGNOR) HIMSELF HAS THE POWER THAT HE INTENDS TO ASSIGN. DOES THE P/A HOLDER HAVE INTENDS TO ASSIGN. DOES THE P/A HOLDER HAVE THE POWER TO MORTGAGE PROPERTY FOR THE THE POWER TO MORTGAGE PROPERTY FOR THE BENEFIT OF THE PRINCIPAL OR THE P/A HOLDER OR BENEFIT OF THE PRINCIPAL OR THE P/A HOLDER OR A THIRD PARTY A THIRD PARTY

• ONLY ONLY ACTIONABLE CLAIMSACTIONABLE CLAIMS CAN BE ASSIGNED u/s CAN BE ASSIGNED u/s 130 OF T.P. ACT130 OF T.P. ACT

• STAMPEDSTAMPED INDEMNITY INDEMNITY (u/s 124 OF INDIAN CONTRACT (u/s 124 OF INDIAN CONTRACT ACT) SHOULD ONLY BE TAKEN ACT) SHOULD ONLY BE TAKEN

• SOME DOCUMENTS ARE REQUIRED TO BE SOME DOCUMENTS ARE REQUIRED TO BE WITNESSED TO BECOME ADMISSIBLE AS EVDENCE WITNESSED TO BECOME ADMISSIBLE AS EVDENCE (e.g. REGISTERED MORTGAGE)(e.g. REGISTERED MORTGAGE)

• CONVEYANCE MORTGAGE OF FIXED ASSETS (LEASE CONVEYANCE MORTGAGE OF FIXED ASSETS (LEASE >1 YEAR) TO BE COMPULSORILY REGISTERED WITH >1 YEAR) TO BE COMPULSORILY REGISTERED WITH THE SUB-REGISTRAR OF ASSURANCESTHE SUB-REGISTRAR OF ASSURANCES

• IN THE CASE OF MORTGAGE OF AGRL LAND, SIMPLE IN THE CASE OF MORTGAGE OF AGRL LAND, SIMPLE MORTGAGE SHOULD BE PREFERREDMORTGAGE SHOULD BE PREFERRED

LIMITATION ACT 1963LIMITATION ACT 1963• DEBT BECOMES TIME BARRED 3 YEARS FROM THE DEBT BECOMES TIME BARRED 3 YEARS FROM THE

DATE IT BECOMES DUE AND CANNOT BE RECOVERED DATE IT BECOMES DUE AND CANNOT BE RECOVERED BY LEGAL PROCESSBY LEGAL PROCESS

• THE LAW ONLY EXTINGUISHES THE REMEDY AND NOT THE LAW ONLY EXTINGUISHES THE REMEDY AND NOT THE RIGHT. GOODS PLEDGED TO BANK CAN BE SOLD THE RIGHT. GOODS PLEDGED TO BANK CAN BE SOLD EVEN AFTER THE EXPIRY OF THE LIMITATION PERIODEVEN AFTER THE EXPIRY OF THE LIMITATION PERIOD

• LIMITATION PERIOD MAY BE EXTENDED UNDER LIMITATION PERIOD MAY BE EXTENDED UNDER CERTAIN CIRCUMSTANCES CERTAIN CIRCUMSTANCES

• SEC 4 : IF PRESCRIBED PERIOD EXPIRES WHEN SEC 4 : IF PRESCRIBED PERIOD EXPIRES WHEN COURT IS CLOSED, SUITMAY BE FILED ON THE NEXT COURT IS CLOSED, SUITMAY BE FILED ON THE NEXT DAY WHEN THE COURT REOPENSDAY WHEN THE COURT REOPENS

• SEC 6 : LEGAL DISABILITY (MINOR, INSANE OR IDIOT)SEC 6 : LEGAL DISABILITY (MINOR, INSANE OR IDIOT)• SEC 11:SUITS AGAINST TRUSTEES AND THEIR SEC 11:SUITS AGAINST TRUSTEES AND THEIR

REPRESENTATIVES SHALL NOT BE BARRED BY ANY REPRESENTATIVES SHALL NOT BE BARRED BY ANY LENGTH OF TIMELENGTH OF TIME

LIMITATION ACT 1963LIMITATION ACT 1963• SEC 12 (I): DAY OF EXECUTION OF DOCUMENTS TO SEC 12 (I): DAY OF EXECUTION OF DOCUMENTS TO

BE EXCLUDEDBE EXCLUDED

• Sec 14 & 15 : EXCLUSION OF TIME IN CERTAIN Sec 14 & 15 : EXCLUSION OF TIME IN CERTAIN CASES (FOR EXAMPLE TIME SPENT FOR CASES (FOR EXAMPLE TIME SPENT FOR PROCEEDING BONA FIDE IN A COURT WITHOUT PROCEEDING BONA FIDE IN A COURT WITHOUT JURISDICTION OR TIME TAKEN FOR OBTAINING JURISDICTION OR TIME TAKEN FOR OBTAINING PRIOR PERMISSION OF GOVERNMENT WHEN PRIOR PERMISSION OF GOVERNMENT WHEN REQUIRED FOR INSTITUTING A SUIT OR THE TIME REQUIRED FOR INSTITUTING A SUIT OR THE TIME DURING WHICH THE DEFENDANT HAS BEEN DURING WHICH THE DEFENDANT HAS BEEN ABSENT FROM INDIA ETC.)ABSENT FROM INDIA ETC.)

• SEC 18 : REVIVAL/ACKNOWLEDGEMENT OF DEBTSEC 18 : REVIVAL/ACKNOWLEDGEMENT OF DEBT

• SEC 19: PAYMENT/DEPOSIT OF ANY AMOUNT BY SEC 19: PAYMENT/DEPOSIT OF ANY AMOUNT BY THE BORROWER HIMSELF BY A SIGNED VOUCHER THE BORROWER HIMSELF BY A SIGNED VOUCHER EXTENDS LIMITATION PERIOD FURTHER BY 3 YEARSEXTENDS LIMITATION PERIOD FURTHER BY 3 YEARS

RECOVERY OF NPAsRECOVERY OF NPAsLEGAL OPTIONS LEGAL OPTIONS

• LAW SUITSLAW SUITS

• RECOVERY THROUGH DRTsRECOVERY THROUGH DRTs

• RECOVERY CERTIFICATESRECOVERY CERTIFICATES

• SUMMARY SUITSSUMMARY SUITS

• ACTION UNDER PUBLIC DEBT ACTION UNDER PUBLIC DEBT RECOVERY ACT (WHERE RECOVERY ACT (WHERE APPLICABLE)APPLICABLE)

LAW SUITSLAW SUITS• CHECK WHETHER DOCUMENTS ARE IN ORDER CHECK WHETHER DOCUMENTS ARE IN ORDER

AND ENFORCEABLEAND ENFORCEABLE• KEEP ALL RELEVANT DOCs/BOOKS/ RECORD IN KEEP ALL RELEVANT DOCs/BOOKS/ RECORD IN

A SEPARATE FOLDERA SEPARATE FOLDER• SEND LEGAL NOTICESEND LEGAL NOTICE• TRY TO SELL PLEDGED GOODS AFTER GIVING TRY TO SELL PLEDGED GOODS AFTER GIVING

DUE NOTICE (u/s 176 OF CONTRACT ACT) DUE NOTICE (u/s 176 OF CONTRACT ACT) BEFORE INSTITUTING THE LAW SUITBEFORE INSTITUTING THE LAW SUIT

• SCRUTINISE THE PLAINT CAREFULLY; GET IT SCRUTINISE THE PLAINT CAREFULLY; GET IT VETTED BY THE LAW OFFICER IF REQD.VETTED BY THE LAW OFFICER IF REQD.

• CAN A MORTGAGE SUIT BE FILED (UNDER CAN A MORTGAGE SUIT BE FILED (UNDER ORDER 34 RULE 4 OF CPC) ? COURTS HAVE ORDER 34 RULE 4 OF CPC) ? COURTS HAVE NO POWERS TO REFIX/REPHASE REPAYMENT NO POWERS TO REFIX/REPHASE REPAYMENT IN CASE OF MORTGAGE SUITSIN CASE OF MORTGAGE SUITS

LAW SUITS LAW SUITS contdcontd … …

REQUEST FOR REQUEST FOR INTERIM/INTERLOCUTARY ORDERS SUCH AS INTERIM/INTERLOCUTARY ORDERS SUCH AS

ATTACHMENT BEFORE JUDGEMENT, ATTACHMENT BEFORE JUDGEMENT, APPOINTMENT OF RECEIVER,ORDER FOR APPOINTMENT OF RECEIVER,ORDER FOR CUSTODY, PRESERVATION AND/OR SALE OF CUSTODY, PRESERVATION AND/OR SALE OF SECURED ASSETS,ISSUE OF AD INTERIM SECURED ASSETS,ISSUE OF AD INTERIM INJUNCTION ETC. INJUNCTION ETC.

EXPEDITE SERVICE OF SUMMONS. IF EXPEDITE SERVICE OF SUMMONS. IF REQUIRED, PRAY FOR SUBSTITUTED SERVICE REQUIRED, PRAY FOR SUBSTITUTED SERVICE (UNDER ORDER 5 RULE 20 )(UNDER ORDER 5 RULE 20 )

ARRANGE FOR WITNESSES TO BE ARRANGE FOR WITNESSES TO BE PRODUCED;CONTEST ADJOURNMENTSPRODUCED;CONTEST ADJOURNMENTS

AFTER PRONOUNCEMENT OF JUDGEMENT, AFTER PRONOUNCEMENT OF JUDGEMENT, APPLY FOR A CERTIFIED COPY THEREOF AND APPLY FOR A CERTIFIED COPY THEREOF AND SCRUTINISE THE SAME CAREFULLYSCRUTINISE THE SAME CAREFULLY

LAW SUITSLAW SUITS contd…contd… INTERIM DECREE (ISSUED UNDER ORDER 35 INTERIM DECREE (ISSUED UNDER ORDER 35

CPC IN CASE OF MORTGAGE SUITS)CPC IN CASE OF MORTGAGE SUITS) FINAL DECREEFINAL DECREE PROCEED FOR EXECUTION; IF DETAILS OF THE PROCEED FOR EXECUTION; IF DETAILS OF THE

ASSETS OF JUDGEMENT DEBTORS ARE NOT ASSETS OF JUDGEMENT DEBTORS ARE NOT KNOWN, FILE AN APPLICATION IN THE COURT KNOWN, FILE AN APPLICATION IN THE COURT UNDER ORDER 21, RULE 41 OF CPCUNDER ORDER 21, RULE 41 OF CPC

IN CASE EXECUTION PROCEEDINGS ARE FILED IN CASE EXECUTION PROCEEDINGS ARE FILED WITHIN 2 YEARS OF THE DATE OF JUDGEMENT WITHIN 2 YEARS OF THE DATE OF JUDGEMENT ATTACHMENT ORDERS WILL BE ISSUED ATTACHMENT ORDERS WILL BE ISSUED STRAIGHTAWAY; OTHERWISE, SUMMONS WILL STRAIGHTAWAY; OTHERWISE, SUMMONS WILL HAVE TO BE ISSUED AGAIN TO THE JUDGEMENT HAVE TO BE ISSUED AGAIN TO THE JUDGEMENT DEBTORS, AND THE RECOVERY PROCESS WILL DEBTORS, AND THE RECOVERY PROCESS WILL BE FURTHER DELAYED.BE FURTHER DELAYED.

SUMMARY SUITSSUMMARY SUITS

• SUMMARY SUITS MAY BE FILED SUMMARY SUITS MAY BE FILED SELECTIVELY UNDER ORDER 37 IF NO SELECTIVELY UNDER ORDER 37 IF NO SECURITY IS AVAILABLE WHEREUPON SECURITY IS AVAILABLE WHEREUPON DEFENDENTS WILL HAVE TO PRAY FOR DEFENDENTS WILL HAVE TO PRAY FOR LEAVE TO DEFEND AND SHOULD THEY LEAVE TO DEFEND AND SHOULD THEY FAIL,DECREE WILL BE AWARDED. FAIL,DECREE WILL BE AWARDED. HOWEVER, IF THE DEFENDENTS GET HOWEVER, IF THE DEFENDENTS GET THE LEAVE TO DEFEND, THEN THE SUIT THE LEAVE TO DEFEND, THEN THE SUIT WILL BE CONVERTED INTO A NORMAL WILL BE CONVERTED INTO A NORMAL MONEY SUIT. MONEY SUIT.

DEBT RECOVERY TRIBUNALSDEBT RECOVERY TRIBUNALS(THE RECOVERY OF DEBT DUE TO BANKS (THE RECOVERY OF DEBT DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT 1993AND FINANCIAL INSTITUTIONS ACT 1993))

• COVERS ALL STATES EXCEPT J & KCOVERS ALL STATES EXCEPT J & K• DRTs AND DRATs CONSTITUTED (SEC 3 (1) , 8(1))DRTs AND DRATs CONSTITUTED (SEC 3 (1) , 8(1))• SEC 17 : JURISDICTION; POWERS; AUTHORITYSEC 17 : JURISDICTION; POWERS; AUTHORITY• SEC 18 : BAR OF JURISDICTIONSEC 18 : BAR OF JURISDICTIONPROCEDURE:PROCEDURE: -APPLICATION u/s 19 SUBMITTED ALONGWITH -APPLICATION u/s 19 SUBMITTED ALONGWITH DOCUMENTS , AFFIDAVITS OF WITNESSES AND DOCUMENTS , AFFIDAVITS OF WITNESSES AND PRESCRIBED FEE (SEC 19(2)) PRESCRIBED FEE (SEC 19(2)) -DEFENDENTS TO SHOW CAUSE WITHIN 30 -DEFENDENTS TO SHOW CAUSE WITHIN 30 DAYS OF SERVICE OF SUMMONS (SEC 19(3)) DAYS OF SERVICE OF SUMMONS (SEC 19(3)) -AFTER HEARING THE CASE, ORDER PASSED -AFTER HEARING THE CASE, ORDER PASSED WHEREUPON THE PRESIDING OFFICER ISSUESWHEREUPON THE PRESIDING OFFICER ISSUES THE RECOVERY CERTIFICATETHE RECOVERY CERTIFICATE

DRTs DRTs contd…..contd…..

PROCEDURE FOR APPEAL:PROCEDURE FOR APPEAL:• BOTH PARTIES CAN APPEALBOTH PARTIES CAN APPEAL• APPEAL TO BE FILED WITHIN 45 DAYS ACCOMPANIED BY APPEAL TO BE FILED WITHIN 45 DAYS ACCOMPANIED BY

PRESCRIBED FEE (SEC 20) NO APPEAL IN CASE ORDER IS PRESCRIBED FEE (SEC 20) NO APPEAL IN CASE ORDER IS ISSUED WITH THE CONSENT OF BOTH THE PARTIESISSUED WITH THE CONSENT OF BOTH THE PARTIES

• AT LEAST 75 % OF DEBT DUE TO BE DEPOSITED BY THE AT LEAST 75 % OF DEBT DUE TO BE DEPOSITED BY THE DEFENDENTS PREFERRING AN APPEAL BEFORE THE DRAT DEFENDENTS PREFERRING AN APPEAL BEFORE THE DRAT (SEC 21)(SEC 21)

MODE OF RECOVERY MODE OF RECOVERY : : SEC 25 AND SEC28SEC 25 AND SEC28REMEMBERREMEMBER EVIDENCE MUST BE FILED ON AFFIDAVITEVIDENCE MUST BE FILED ON AFFIDAVIT ENSURE METICULOUS FOLLOW UP WITH PANEL ENSURE METICULOUS FOLLOW UP WITH PANEL

ADVOCATESADVOCATES CERTIFIED EXTRACTS OF ACCOUNTS MUST BE ATTACHED CERTIFIED EXTRACTS OF ACCOUNTS MUST BE ATTACHED

TO CLAIM APPLICATION UNDER THE RELEVANT TO CLAIM APPLICATION UNDER THE RELEVANT PROVISIONS OF BANKER’S BOOKS EVIDENCE ACT AND IT PROVISIONS OF BANKER’S BOOKS EVIDENCE ACT AND IT ACTACT

REMEMBERREMEMBER ADVOCATES MUST BE PRESENT ON ALL THE DATES OF ADVOCATES MUST BE PRESENT ON ALL THE DATES OF

HEARINGHEARING CLAIM AFFIDAVITS MUST COMPREHENSIVELY DEAL CLAIM AFFIDAVITS MUST COMPREHENSIVELY DEAL

WITH ALLTHE PONTS RAISED IN THE DEFENCE IN THEIR WITH ALLTHE PONTS RAISED IN THE DEFENCE IN THEIR WRITTEN STATEMENTSWRITTEN STATEMENTS

DETAILS OF MORTGAGED PROPERTY MUST BE DETAILS OF MORTGAGED PROPERTY MUST BE ENCLOSED. THERE IS NO NEED TO SEEK ATTACHMENT ENCLOSED. THERE IS NO NEED TO SEEK ATTACHMENT OF MORTGAGED PROPERTY BUT ASK FOR INJUCTIONS OF MORTGAGED PROPERTY BUT ASK FOR INJUCTIONS ON THE DEFENDENTS TO RESTRAIN THEM FROM ON THE DEFENDENTS TO RESTRAIN THEM FROM ALIENATING THEIR OTHER ASSETSALIENATING THEIR OTHER ASSETS

DO NOT PRAY FOR ALL THE RELIEFS AT A TIME AS IT DO NOT PRAY FOR ALL THE RELIEFS AT A TIME AS IT MAY DELAY THE FINAL DECISIONMAY DELAY THE FINAL DECISION

RESIST ADJOURNMENTSRESIST ADJOURNMENTS TRY TO OBTAIN INTERIM RECOVERY CERTIFICATE TO TRY TO OBTAIN INTERIM RECOVERY CERTIFICATE TO

THE EXTENT CLAIM IS ADMITTED BY THE DEFENCETHE EXTENT CLAIM IS ADMITTED BY THE DEFENCE

THE SECURITISATION THE SECURITISATION

ANDAND RECONSTRUCTION OF FINANCIAL RECONSTRUCTION OF FINANCIAL

ASSETSASSETS AND AND ENFORCEMENT OF SECURITY INTEREST ENFORCEMENT OF SECURITY INTEREST

ACT, 2002ACT, 2002

STATE BANK ACADEMY, GURGAONSTATE BANK ACADEMY, GURGAON

SRESI ACT, 2002SRESI ACT, 2002

(Promulgated on 24.06.2002; re-promulgated on (Promulgated on 24.06.2002; re-promulgated on

21.08.200221.08.2002))

• THE ACT PERMITS BANKS AND FIs TO TRANSFER THE ACT PERMITS BANKS AND FIs TO TRANSFER THEIR NPAs TO SECURITISATION AND ASSET THEIR NPAs TO SECURITISATION AND ASSET RECONSTRUCTION COMPANIES (REGISTERED RECONSTRUCTION COMPANIES (REGISTERED UNDER INDIAN COMPANIES ACT)UNDER INDIAN COMPANIES ACT)

• RBI WILL BE THE REGULATOR FOR THE ASSET RBI WILL BE THE REGULATOR FOR THE ASSET RECONSTRUCTION COMPANIES AS WELLRECONSTRUCTION COMPANIES AS WELL

• ASSET RECONSTRUCTION & SECURITISATION ASSET RECONSTRUCTION & SECURITISATION COMPANIES WILL ACQUIRE THE FINANCIAL COMPANIES WILL ACQUIRE THE FINANCIAL ASSETS OF BANKS/FIs BY ISSUING BONDS/ ASSETS OF BANKS/FIs BY ISSUING BONDS/ DEBENTURES/SECURITIES.DEBENTURES/SECURITIES.

SECURITISATION ACT …SECURITISATION ACT …contd.contd.• SEC 3SEC 3 : REGISTRATION OF SCs/RCs : REGISTRATION OF SCs/RCs• SEC 5SEC 5 : MODE OF ACQUISITION OF LOAN ASSETS : MODE OF ACQUISITION OF LOAN ASSETS

AND THE UNDERLYING SECURITY BY THE SCs/RCsAND THE UNDERLYING SECURITY BY THE SCs/RCs• SEC 6SEC 6 : MANNER IN WHICH NOTICE MAY BE GIVEN : MANNER IN WHICH NOTICE MAY BE GIVEN

BY BANKS/FIs TO BORROWERS REFGARDING BY BANKS/FIs TO BORROWERS REFGARDING TRANSFER OF LOANS TO SCs/RCsTRANSFER OF LOANS TO SCs/RCs

• SEC 7SEC 7: ISSUE OF SECURITIES TO RAISE RESOURCES : ISSUE OF SECURITIES TO RAISE RESOURCES FOR PURCHASE OF LOAN ASSETSFROM BANKS/FIsFOR PURCHASE OF LOAN ASSETSFROM BANKS/FIs

• SEC 8SEC 8 : EXEMPTING SECURITY RECEIPTS FROM : EXEMPTING SECURITY RECEIPTS FROM REGISTRATION REQUIREMENTSREGISTRATION REQUIREMENTS

• SEC 9,15SEC 9,15 : POWERS OF SCs/RCs TO TAKE OVER THE : POWERS OF SCs/RCs TO TAKE OVER THE BORROWER’S BUSINESS AND INITIATE MEASURES BORROWER’S BUSINESS AND INITIATE MEASURES FOR REALISATION OF LOANSFOR REALISATION OF LOANS

SECURITISATION ACT SECURITISATION ACT …contd.…contd.

• SEC 12SEC 12 : POWERS OF RBI TO REGULATE THE : POWERS OF RBI TO REGULATE THE BUSINESS OF THE SCs/RCsBUSINESS OF THE SCs/RCs

• SEC 13SEC 13 : ENFORCEMENT OF SECURITY INTEREST : ENFORCEMENT OF SECURITY INTEREST BY THE SECURED CREDITOR WITHOUT THE BY THE SECURED CREDITOR WITHOUT THE INTERVENTION OF A COURT OR TRIBUNAL BY INTERVENTION OF A COURT OR TRIBUNAL BY GIVING 60 DAYS’ NOTICE. THE SECURED GIVING 60 DAYS’ NOTICE. THE SECURED CREDITOR CAN CREDITOR CAN

TAKE POSSESSION/MANAGEMENT OF THE TAKE POSSESSION/MANAGEMENT OF THE SECURED ASSET FOR TRANSFER BY SALE OR SECURED ASSET FOR TRANSFER BY SALE OR LEASE OR ASSIGNMENT FOR REALISATION OF LEASE OR ASSIGNMENT FOR REALISATION OF DUES FROM THE SECURED ASSETDUES FROM THE SECURED ASSET

APPOINT ANY PERSON TO MANAGE THE SECURED APPOINT ANY PERSON TO MANAGE THE SECURED ASSET SO TAKENASSET SO TAKEN

SECURITISATION ACT SECURITISATION ACT …contd.…contd.REQUIRE ANY PERSON WHO HAS ACQUIRED ANY OF REQUIRE ANY PERSON WHO HAS ACQUIRED ANY OF

THE SECURED ASSETS AND OWES MONEY TO THE THE SECURED ASSETS AND OWES MONEY TO THE BORROWER TO PAY THE SECURED CREDITOR BORROWER TO PAY THE SECURED CREDITOR TOWARDS CLEARING OF THE DEBT (AND ALL COSTS)TOWARDS CLEARING OF THE DEBT (AND ALL COSTS)

PREVENT TRANSFER BY SALE, LEASE OR PREVENT TRANSFER BY SALE, LEASE OR OTHERWISE ANY ASSET BY THE BORROWER AFTER OTHERWISE ANY ASSET BY THE BORROWER AFTER RECEIPT OF NOTICERECEIPT OF NOTICE

• SEC 14SEC 14 : DISTRICT MAGISTRATE/CMM TO PROVIDE : DISTRICT MAGISTRATE/CMM TO PROVIDE POLICE PROTECTION TO BANKS/FIs FOR TAKING POLICE PROTECTION TO BANKS/FIs FOR TAKING POSSESSION OF ASSETSPOSSESSION OF ASSETS

• SEC 17,18SEC 17,18 : DRTs/DRATs TO ENTERTAIN APPEALS : DRTs/DRATs TO ENTERTAIN APPEALS AGAINST ACTION TAKEN BY BANKS/FIs UNDER THE AGAINST ACTION TAKEN BY BANKS/FIs UNDER THE ACT (ANY PERSON MAY PREFER APPEAL TO THE DRT ACT (ANY PERSON MAY PREFER APPEAL TO THE DRT WITHIN 45 DAYS AND TO THE DRAT WITHIN 30 WITHIN 45 DAYS AND TO THE DRAT WITHIN 30 DAYS) DAYS)

• SEC 20 TO 26 SEC 20 TO 26 : CENTRAL REGISTRY TO BE SET UP : CENTRAL REGISTRY TO BE SET UP FOR REGISTRATION OF TRANSACTIONS OF FOR REGISTRATION OF TRANSACTIONS OF SECURITISATION AND RECONSTRUCTION OF SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETSFINANCIAL ASSETS..

SECURITISATION ACT SECURITISATION ACT …contd.…contd.

• SEC 31SEC 31 : PROVISIONS OF ACT NOT TO APPLY IN : PROVISIONS OF ACT NOT TO APPLY IN THE FOLLOWING CASES:THE FOLLOWING CASES:

LIEN ON ANY GOODS, MONEY OR SECURITYLIEN ON ANY GOODS, MONEY OR SECURITY PLEDGE OF MOVABLESPLEDGE OF MOVABLES CREATION OF SECURITY INTEREST IN ANY CREATION OF SECURITY INTEREST IN ANY

AIRCRAFT OR IN ANY VESSELAIRCRAFT OR IN ANY VESSEL ANY CONDITIONAL SALE, HIRE-PURCHASE OR ANY CONDITIONAL SALE, HIRE-PURCHASE OR

LEASE OR ANY OTHER CONTRACT IN WHICH NO LEASE OR ANY OTHER CONTRACT IN WHICH NO SECURITY INTEREST HAS BEEN CREATEDSECURITY INTEREST HAS BEEN CREATED

RIGHTS OF UNPAID SELLERRIGHTS OF UNPAID SELLER PROPERTIES NOT LIABLE TO ATTACHMENT OR PROPERTIES NOT LIABLE TO ATTACHMENT OR

SALE UNDER CPCSALE UNDER CPC ANY SECURITY INTEREST FOR SECURING ANY SECURITY INTEREST FOR SECURING

REPAYMENT OF ANY FINANCIAL ASSET NOT REPAYMENT OF ANY FINANCIAL ASSET NOT EXCEEDING ONE LAKH RUPEESEXCEEDING ONE LAKH RUPEES

ANY SECURITY INTEREST IN AGRL LANDANY SECURITY INTEREST IN AGRL LANDANY CASE IN WHICH AMOUNT DUE < 20 % ANY CASE IN WHICH AMOUNT DUE < 20 %

OF PRINCIPAL AMOUNT AND INTEREST OF PRINCIPAL AMOUNT AND INTEREST THEREONTHEREON

SEC 32SEC 32 : PROTECTION OF ACTION TAKEN : PROTECTION OF ACTION TAKEN IN GOOD FAITHIN GOOD FAITH

SEC 34SEC 34 : CIVIL COURT NOT TO HAVE : CIVIL COURT NOT TO HAVE JURISDICTIONJURISDICTION

SEC 35SEC 35 : PROVISIONS OF ACT TO : PROVISIONS OF ACT TO OVERRIDE OTHER LAWS. HOWEVER, OVERRIDE OTHER LAWS. HOWEVER, APPLICATION OF OTHER LAWS NOT APPLICATION OF OTHER LAWS NOT BARRED CLAIM WITHIN THE PERIOD OF BARRED CLAIM WITHIN THE PERIOD OF LIMITATIONLIMITATION

OPERATIVE GUIDELINESOPERATIVE GUIDELINES NOTICES ARE TO BE ISSUED IFNOTICES ARE TO BE ISSUED IF• TOTAL AMOUNT OUTSTANDING (LEDGER TOTAL AMOUNT OUTSTANDING (LEDGER

BALANCE) IS Rs. 1 LAC AND ABOVEBALANCE) IS Rs. 1 LAC AND ABOVE• BANK IS THE SOLE SECURED LENDER OR HAS BANK IS THE SOLE SECURED LENDER OR HAS

MINIMUM 75 % SHARE OR SECURED CREDITORS MINIMUM 75 % SHARE OR SECURED CREDITORS HAVING MINIMUM 75 % SHARE (INCLUDING HAVING MINIMUM 75 % SHARE (INCLUDING SECOND CHARGE HOLDERS) GIVE THEIR SECOND CHARGE HOLDERS) GIVE THEIR CONSENTCONSENT

BORROWERS EXEMPTEDBORROWERS EXEMPTED • PSUs - CENTRAL / STATEPSUs - CENTRAL / STATE• NPAs WHERE REHABILITATION / OTS IS APPROVED NPAs WHERE REHABILITATION / OTS IS APPROVED

OR IS UNDER PROCESS AND 25 % OF OFFER OR IS UNDER PROCESS AND 25 % OF OFFER AMOUNT IS RECEIVEDAMOUNT IS RECEIVED

• CASES REFERRED TO CDR CELLCASES REFERRED TO CDR CELL

• WHERE SECURITY AVAILABLE IS INADEQUATE TO WHERE SECURITY AVAILABLE IS INADEQUATE TO COVER COSTSCOVER COSTS

• DRT / COURT OR BIFR TO BE ADVISED OF ACTION DRT / COURT OR BIFR TO BE ADVISED OF ACTION TAKEN U/S 13(2) OR 13(4) OF THE ACT, AS THE TAKEN U/S 13(2) OR 13(4) OF THE ACT, AS THE CASE MAY BECASE MAY BE

• RECEIVER, IF ALREADY APPOINTED, TO BE RECEIVER, IF ALREADY APPOINTED, TO BE ADVISED AND COURT / BENCH REQUESTED TO ADVISED AND COURT / BENCH REQUESTED TO KEEP THE CASE IN ABEYANCEKEEP THE CASE IN ABEYANCE

• IN THE CASE OF NON- BIFR / SUIT-NOT-FILED IN THE CASE OF NON- BIFR / SUIT-NOT-FILED CASES, SIMULTANEOUS SUIT TO BE FILED IN CASES, SIMULTANEOUS SUIT TO BE FILED IN DRT / COURT TO KEEP FUTURE RECOURSE OPEN DRT / COURT TO KEEP FUTURE RECOURSE OPEN FOR REALISATION OF BALANCE AMOUNTFOR REALISATION OF BALANCE AMOUNT

PROCESSPROCESS• LEAD/ DESIGNATED SECURED CREDITOR OR DSC LEAD/ DESIGNATED SECURED CREDITOR OR DSC

(HAVING MAXIMUM OUTSTANDINGS) TO OBTAIN (HAVING MAXIMUM OUTSTANDINGS) TO OBTAIN WRITTEN CONSENT OF ALL OTHER SECURED WRITTEN CONSENT OF ALL OTHER SECURED LENDERS (OR THOSE HAVING MIN.75% SHARE)LENDERS (OR THOSE HAVING MIN.75% SHARE)

• SECURED CREDITOR STATUS TO BE DETERMINED SECURED CREDITOR STATUS TO BE DETERMINED ON THE BASIS OF ASSET ON WHICH SECURITY ON THE BASIS OF ASSET ON WHICH SECURITY INTEREST IS PROPOSED TO BE ENFORCEDINTEREST IS PROPOSED TO BE ENFORCED

• IRAC CLASSIFICATION OF DSC TO BE THE IRAC CLASSIFICATION OF DSC TO BE THE DECIDING FACTORDECIDING FACTOR

• CONSENT TO BE CONVEYED ONLY ON WRITTEN CONSENT TO BE CONVEYED ONLY ON WRITTEN REQUEST FROM DSCREQUEST FROM DSC

• AUTHORITY STRUCTURE – OSMGS IVAUTHORITY STRUCTURE – OSMGS IV

• NOTICE TO BE ISSUED BY ALL SECURED NOTICE TO BE ISSUED BY ALL SECURED CREDITORSCREDITORS

• DSC TO BEAR ALL EXPENSES OF SECURITY DSC TO BEAR ALL EXPENSES OF SECURITY VALUATION / MAINTENANCE / INSURANCE / VALUATION / MAINTENANCE / INSURANCE / ENFORCEMENT AND SHARE WITH ALL FIRST/ PARI ENFORCEMENT AND SHARE WITH ALL FIRST/ PARI PASSU CHARGE HOLDERS IN RATIO OF PASSU CHARGE HOLDERS IN RATIO OF OUTSTANDINGS AND WITH SECOND CHARGE OUTSTANDINGS AND WITH SECOND CHARGE HOLDERS IN RATIO OF RECOVERY OF OVERDUES. HOLDERS IN RATIO OF RECOVERY OF OVERDUES.

• DSC TO CO-ORDINATE LEGAL DEFENCE IF ACTION DSC TO CO-ORDINATE LEGAL DEFENCE IF ACTION IS CONTESTED BY BORROWERIS CONTESTED BY BORROWER

FURTHER COURSE OF ACTION FURTHER COURSE OF ACTION • FULL RECOVERY – ACTION TO BE SUSPENDED FULL RECOVERY – ACTION TO BE SUSPENDED

• PARTIAL RECOVERY – DECISION OF AUTHORITY PARTIAL RECOVERY – DECISION OF AUTHORITY CALLING UP THE ADVANCE – SUBJECT TO FRESH CALLING UP THE ADVANCE – SUBJECT TO FRESH REVIVAL / BALANCE CONFIRMATION (WITHIN LAW REVIVAL / BALANCE CONFIRMATION (WITHIN LAW OF LIMITATION)OF LIMITATION)

• COMPROMISE OFFERS TO BE PROCESSED AS PER COMPROMISE OFFERS TO BE PROCESSED AS PER PROCEDUREPROCEDURE

• CONTEST NOTICE FROM BORROWER TO BE DEALT CONTEST NOTICE FROM BORROWER TO BE DEALT WITH IN CONSULTATION WITH LAW DEPARTMENTWITH IN CONSULTATION WITH LAW DEPARTMENT

• IN CASE OF NO RESPONSE FROM BORROWERS, IN CASE OF NO RESPONSE FROM BORROWERS, TAKE POSSESSION OF SECURED ASSETS AFTER 60 TAKE POSSESSION OF SECURED ASSETS AFTER 60 DAYSDAYS

• OR, TAKE OVER MANAGEMENT OF SECURED OR, TAKE OVER MANAGEMENT OF SECURED ASSET (NOT FOR THE TIME BEING)ASSET (NOT FOR THE TIME BEING)

• OR, APPOINT AN ENFORCEMENT AGENCY TO OR, APPOINT AN ENFORCEMENT AGENCY TO MANAGE THE SECURED ASSETMANAGE THE SECURED ASSET

• SEND NOTICE TO THE DEBTORS OF THE SEND NOTICE TO THE DEBTORS OF THE DEFAULTER BORROWER DEMANDING DIRECT DEFAULTER BORROWER DEMANDING DIRECT PAYMENT OF DUES TO THE BANKPAYMENT OF DUES TO THE BANK

PROCEDURE FOR SEIZURE OF PROCEDURE FOR SEIZURE OF PROPERTYPROPERTY

• IDENTIFY ASSETS AS PER BRANCH RECORDIDENTIFY ASSETS AS PER BRANCH RECORD

• BORROWER TO BE GIVEN 30 DAYS’ NOTICEBORROWER TO BE GIVEN 30 DAYS’ NOTICE

• TAKE POSSESSION OF MOVABLE ASSETS WITH TAKE POSSESSION OF MOVABLE ASSETS WITH THE HELP OF DISTRICT MAGISTRATE OR CMM IN THE HELP OF DISTRICT MAGISTRATE OR CMM IN THE PRESENCE OF TWO WITNESSESTHE PRESENCE OF TWO WITNESSES

• PANCHNAMA AND INVENTORY TO BE PREPAREDPANCHNAMA AND INVENTORY TO BE PREPARED• IN CASE OF IMMOVABLE PROPERTY, ISSUE/ IN CASE OF IMMOVABLE PROPERTY, ISSUE/

PUBLISH POSSESSION NOTICEPUBLISH POSSESSION NOTICE• PROPERTY TO BE KEPT UNDER PROPER CARE / PROPERTY TO BE KEPT UNDER PROPER CARE /

MAINTENANCE OR SOLD IF LIKELY TO DECAYMAINTENANCE OR SOLD IF LIKELY TO DECAY• NOTICE TO BE SENT TO DEBTORS TO DEPOSIT NOTICE TO BE SENT TO DEBTORS TO DEPOSIT

PROCEEDS WITH BANKS AND PROHIBITING PROCEEDS WITH BANKS AND PROHIBITING DISPOSAL OF PROCEEDS / INTEREST IN ANY DISPOSAL OF PROCEEDS / INTEREST IN ANY MANNER MANNER

• RESERVE PRICE TO BE FIXED ON THE BASIS OF RESERVE PRICE TO BE FIXED ON THE BASIS OF VALUATION BY VALUER (APPROVED BY ECCB)VALUATION BY VALUER (APPROVED BY ECCB)

• VALUATION TO BE CLEARED BY THE SRESI VALUATION TO BE CLEARED BY THE SRESI VALUATION COMMITTEE ( GM, Dy. G.M.(CB), Cir. VALUATION COMMITTEE ( GM, Dy. G.M.(CB), Cir. CO )CO )

PROCEDURE FOR SALEPROCEDURE FOR SALE (AFTER VALUATION, FIX A RESERVE PRICE (AFTER VALUATION, FIX A RESERVE PRICE BELOW WHICH SALE WILL NOT BE EFFECTED)BELOW WHICH SALE WILL NOT BE EFFECTED)

BY OBTAINING QUOTATION - MINIMUM 3 BY OBTAINING QUOTATION - MINIMUM 3 INTERESTED PARTIESINTERESTED PARTIES

• BY INVITING PUBLIC TENDERSBY INVITING PUBLIC TENDERS -NOTICE TO BE -NOTICE TO BE PUBLISHED IN TWO NEWSPAPERS WITH ONE PUBLISHED IN TWO NEWSPAPERS WITH ONE OF THEM HAVING WIDE LOCAL CIRCULATIONOF THEM HAVING WIDE LOCAL CIRCULATION

• BY PUBLIC AUCTIONBY PUBLIC AUCTION

• BY PRIVATE TREATYBY PRIVATE TREATY

APPOINTMENT OF ENFORCEMENT APPOINTMENT OF ENFORCEMENT AGENTSAGENTS

• AUTHORISED OFFICERS MAY ENLIST SERVICES OF AUTHORISED OFFICERS MAY ENLIST SERVICES OF EAs, IF WARRANTED, FOR:-EAs, IF WARRANTED, FOR:-

• TAKING POSSESSION OF MOVABLE AND IMMOVABLE TAKING POSSESSION OF MOVABLE AND IMMOVABLE PROPERTIESPROPERTIES

• PREPARING THE PANCHANAMA/INVENTORYPREPARING THE PANCHANAMA/INVENTORY

• MAKING SUITABLE ARRANGEMENTS FOR STORAGE, MAKING SUITABLE ARRANGEMENTS FOR STORAGE, MAINTENANCE, SECURITY, LOCKING-UP AND MAINTENANCE, SECURITY, LOCKING-UP AND INSURANCEINSURANCE

• SENDING NOTICES TO DEBTORS OF BORROWERSSENDING NOTICES TO DEBTORS OF BORROWERS

• ARRANGING FOR VALUATION AND SALE OF ASSETS ARRANGING FOR VALUATION AND SALE OF ASSETS AS WELL AS COLLECTING SALE PROCEEDS, ISSUING AS WELL AS COLLECTING SALE PROCEEDS, ISSUING SALE CERTIFICATE AND COMPLETING OTHER SALE CERTIFICATE AND COMPLETING OTHER NECESSARY FORMALITIES.NECESSARY FORMALITIES.

SALE OF ASSETS TO SECURITISATION SALE OF ASSETS TO SECURITISATION CO./ RECONSTRUCTION CO. (SC/RC)CO./ RECONSTRUCTION CO. (SC/RC)

ELIGIBILITY CRITERIAELIGIBILITY CRITERIA

NPAsNPAs (INCLUDING BONDS/DEBENTURES) IN LIVE (INCLUDING BONDS/DEBENTURES) IN LIVE

LEDGER/PB/RD ACCOUNTS OR AUCALEDGER/PB/RD ACCOUNTS OR AUCA

• WHERE WE ARE SOLE LENDERS, ACCOUNTS WHERE WE ARE SOLE LENDERS, ACCOUNTS WITH LEDGER OUTSTANDINGS OF Rs. 5 Crs. & WITH LEDGER OUTSTANDINGS OF Rs. 5 Crs. & OVER. EXCEPTIONS MAY BE PERMITTED BY OVER. EXCEPTIONS MAY BE PERMITTED BY THE MD & GE (NBG) IF RECOMMENDED BY THE MD & GE (NBG) IF RECOMMENDED BY CIRCLE CGMCIRCLE CGM

• IN CASE OF CONSORTIUM OR SYNDICATED IN CASE OF CONSORTIUM OR SYNDICATED LOANS/ MULTIPLE BANKING ARRANGEMENT, LOANS/ MULTIPLE BANKING ARRANGEMENT, IF 75 % OF CREDITORS (BY VALUE) SEEK/ IF 75 % OF CREDITORS (BY VALUE) SEEK/ AGREE FOR THE SALE.AGREE FOR THE SALE.

SALE OF ASSETS TO SECURITISATION SALE OF ASSETS TO SECURITISATION CO./ RECONSTRUCTION CO. (SC/RC)CO./ RECONSTRUCTION CO. (SC/RC)

STANDARD ASSETS STANDARD ASSETS • ONLYONLY ACCOUNTS UNDER CONSORTIUM/ ACCOUNTS UNDER CONSORTIUM/

MULTIPLE BANKINGMULTIPLE BANKING• AT LEAST 75 % OF ASSETS BY VALUE AT LEAST 75 % OF ASSETS BY VALUE

SHOULD HAVE BEEN CLASSIFIED AS NPAs SHOULD HAVE BEEN CLASSIFIED AS NPAs IN THE BOOKS OF OTHER BANKS/ FIsIN THE BOOKS OF OTHER BANKS/ FIs

• AT LEAST 75 % OF BANKS/ FIs BY VALUE AT LEAST 75 % OF BANKS/ FIs BY VALUE WHO ARE IN THE CONSORTIUM/MULTIPLE WHO ARE IN THE CONSORTIUM/MULTIPLE BANKING ARRANGEMENT AGREE TO THE BANKING ARRANGEMENT AGREE TO THE SALE OF THE ASSET TO SC/RCSALE OF THE ASSET TO SC/RC

SALE OF ASSETS TO SECURITISATION SALE OF ASSETS TO SECURITISATION CO./ RECONSTRUCTION CO. (SC/RC)CO./ RECONSTRUCTION CO. (SC/RC)

THE FOLLOWING ASSETS WILL NOT BE OFFERED FOR THE FOLLOWING ASSETS WILL NOT BE OFFERED FOR SALE TO SC/RC:SALE TO SC/RC:

• NPAs WHERE OTS/ REHABILITATION IS APPROVED NPAs WHERE OTS/ REHABILITATION IS APPROVED AND REPAYMENT IS BEING MADE AS PER APPROVED AND REPAYMENT IS BEING MADE AS PER APPROVED PLAN BUT WHERE TERMS OF OTS ARE NOT BEING PLAN BUT WHERE TERMS OF OTS ARE NOT BEING COMPLIED WITH, ASSETS MAY BE OFFERED FOR COMPLIED WITH, ASSETS MAY BE OFFERED FOR SALE WITH THE APPROVAL OF MD & GE (NBG)SALE WITH THE APPROVAL OF MD & GE (NBG)

• ASSETS WHERE OTS IS UNDER PROCESS (AND ASSETS WHERE OTS IS UNDER PROCESS (AND WHERE WHERE

25 % OF THE OFFER AMOUNT HAS BEEN DEPOSITED 25 % OF THE OFFER AMOUNT HAS BEEN DEPOSITED BY THE BORROWER/ GUARANTOR) BY THE BORROWER/ GUARANTOR) • ACCOUNTS REFERRED TO CDR BY OUR BANK OR ACCOUNTS REFERRED TO CDR BY OUR BANK OR

OTHER BANKS/FIs WHERE RESTRUCTURING OTHER BANKS/FIs WHERE RESTRUCTURING PRPOSALS ARE UNDER CONSIDERATION OF THE CDR PRPOSALS ARE UNDER CONSIDERATION OF THE CDR EMPOWERED GROUPEMPOWERED GROUP

IDENTIFICATION & VALUATION OF IDENTIFICATION & VALUATION OF ASSETSASSETS

• SECURITISATION & RECONSTRUCTION CELL (SECURITISATION & RECONSTRUCTION CELL (SRCSRC) SET ) SET UP IN NBG UNDER CGM-CREDIT MGT TO INITIATE THE UP IN NBG UNDER CGM-CREDIT MGT TO INITIATE THE PROCESS AND SUBSEQUENTLY COORDINATE PROCESS AND SUBSEQUENTLY COORDINATE IDENTIFICATION OF ASSETS FOR POSSIBLE SALE TO IDENTIFICATION OF ASSETS FOR POSSIBLE SALE TO SC/RC. SC/RC.

• AFTER THE ASSETS ARE IDENTIFIED, AFTER THE ASSETS ARE IDENTIFIED, SRCSRC WOULD SEND WOULD SEND AN INDICATIVE LIST OF ASSETS AVAILABLE FOR SALE TO AN INDICATIVE LIST OF ASSETS AVAILABLE FOR SALE TO THE IDENTIFIED SCs/ RCs. THE IDENTIFIED SCs/ RCs.

• CIRCLES/CAG WILL SIMULTANEOUSLY UNDERTAKE A CIRCLES/CAG WILL SIMULTANEOUSLY UNDERTAKE A FRESH VALUATION OF ASSETS BY A SUITABLE AGENCY FRESH VALUATION OF ASSETS BY A SUITABLE AGENCY FROM THE PANEL OF ENFORCEMENT AGENTS/ VALUERS FROM THE PANEL OF ENFORCEMENT AGENTS/ VALUERS (APPROVED BY THE ECCB) AND SEND REPORT TO (APPROVED BY THE ECCB) AND SEND REPORT TO SRCSRC..

• COMMON APPROACH MAY BE ADOPTED IN COMMON APPROACH MAY BE ADOPTED IN COORDINATION WITH OTHER FIs/ BANKS OR WITH COORDINATION WITH OTHER FIs/ BANKS OR WITH SC/RC TO SAVE COSTS OR TO CUT DELAYS PROVIDED SC/RC TO SAVE COSTS OR TO CUT DELAYS PROVIDED THE ENFORCEMENT AGENT/ VALUER IS FROM OUR THE ENFORCEMENT AGENT/ VALUER IS FROM OUR APPROVED PANEL.APPROVED PANEL.

IDENTIFICATION & VALUATION OF IDENTIFICATION & VALUATION OF ASSETSASSETS

• GM (NPA MGT) OR GM (COMM) TO GM (NPA MGT) OR GM (COMM) TO COORDINATE THE WORK AT THE CIRCLE COORDINATE THE WORK AT THE CIRCLE LEVEL FOR BOTH THE RNW AND CNW LEVEL FOR BOTH THE RNW AND CNW ACCOUNTS. IN CAG, BRANCH HEAD WILL ACCOUNTS. IN CAG, BRANCH HEAD WILL DISCHARGE THIS RESPONSIBILITY.DISCHARGE THIS RESPONSIBILITY.

• PRICE OFFERED BY THE SC/RC TO BE PRICE OFFERED BY THE SC/RC TO BE EVALUATED ON THE FOLLOWING BASIS:-EVALUATED ON THE FOLLOWING BASIS:-WHETHER THE UNIT IS IN OPERATION OR CLOSEDWHETHER THE UNIT IS IN OPERATION OR CLOSEDREALISABLE VALUE OF ASSETSREALISABLE VALUE OF ASSETSWORTH OF THE GUARANTORSWORTH OF THE GUARANTORSOTHER OPTIONS (RECOVERY THRU’ OTHER MEANS, OTHER OPTIONS (RECOVERY THRU’ OTHER MEANS,

KEEPING IN VIEW THE REALISABLE AMOUNT AS KEEPING IN VIEW THE REALISABLE AMOUNT AS WELL AS TIME LIKELY TO BE TAKEN IN RECOVERY)WELL AS TIME LIKELY TO BE TAKEN IN RECOVERY)

DECISION MAKING PROCESSDECISION MAKING PROCESS• CIRCLES/ CAG AND CIRCLES/ CAG AND SRCSRC WILL WEIGH WILL WEIGH ALLALL FEASIBLE FEASIBLE

OPTIONS AGAINST THE OFFER MADE BY THE SC/RC OPTIONS AGAINST THE OFFER MADE BY THE SC/RC ON THE PRESCRIBED (STRUCTURED) FORMAT WHICH ON THE PRESCRIBED (STRUCTURED) FORMAT WHICH PROVIDES FOR PROVIDES FOR FOURFOUR RECOVERY OPTIONS, NAMELY, RECOVERY OPTIONS, NAMELY, SEIZURE UNDER THE ACT, RECOURSE TO LEGAL REMEDY SEIZURE UNDER THE ACT, RECOURSE TO LEGAL REMEDY (DRT OR OTHER COURTS0, OFFER FROM A SC/RC, AND (DRT OR OTHER COURTS0, OFFER FROM A SC/RC, AND OTS/COMPROMISE.OTS/COMPROMISE.

• PRICE NEGOTIATION WITH THE SC/RC WILL BE DONE BY A PRICE NEGOTIATION WITH THE SC/RC WILL BE DONE BY A TEAM COMPRISINGTEAM COMPRISING GM (NPA MGT) OR GM (COMM) OF THE CIRCLEGM (NPA MGT) OR GM (COMM) OF THE CIRCLE DGM (DGM (SRCSRC)) CONCERNED DGM (BRANCH/MODULE/CAG) OR CONCERNED DGM (BRANCH/MODULE/CAG) OR

NOMINEE OF THE CGM(CAG CENTRAL)NOMINEE OF THE CGM(CAG CENTRAL)AFTER PRICE NEGOTIATION, PROPOSAL TO BE PUT UP BY AFTER PRICE NEGOTIATION, PROPOSAL TO BE PUT UP BY CIRCLE/CAG TO CCC-I/COCC/ECCB AS PER DELEGATION CIRCLE/CAG TO CCC-I/COCC/ECCB AS PER DELEGATION OF FINANCIAL POWERS FOR COMPROMISE SETTLEMENT. OF FINANCIAL POWERS FOR COMPROMISE SETTLEMENT.

DECISION MAKING PROCESSDECISION MAKING PROCESS

• IN CASE NEGOTIATION FAILS BECAUSE OF IN CASE NEGOTIATION FAILS BECAUSE OF THE OFFER PRICE BEING UNACCEPTABLE TO THE OFFER PRICE BEING UNACCEPTABLE TO BANK, REPORT TO BE SENT TO MD & GE BANK, REPORT TO BE SENT TO MD & GE BEFORE REJECTING THE SC/RC OFFER.BEFORE REJECTING THE SC/RC OFFER.

• IF OTHER BANKS/FIs HOLDING 75% OR MORE IF OTHER BANKS/FIs HOLDING 75% OR MORE OF THE ASSET BY VALUE DECIDE TO OF THE ASSET BY VALUE DECIDE TO ACCEPT THE VALUE OFFERED BY THE SC/RC, ACCEPT THE VALUE OFFERED BY THE SC/RC, BANK WILL ALSO HAVE TO ACCEPT THE BANK WILL ALSO HAVE TO ACCEPT THE OFFER AS PER RBI GUIDELINES.OFFER AS PER RBI GUIDELINES.

TERMS & CONDITIONSTERMS & CONDITIONS NO LIABILITY SHOULD DEVOLVE ON THE BANK AFTER NO LIABILITY SHOULD DEVOLVE ON THE BANK AFTER

THE SALE OF ASSETS TO SC/RCTHE SALE OF ASSETS TO SC/RC BANK WILL NOT ASSUME ANY RISK AFTER THE SALE.BANK WILL NOT ASSUME ANY RISK AFTER THE SALE. SALE CONSIDERATION OF FINANCIAL ASSETS SOLD SALE CONSIDERATION OF FINANCIAL ASSETS SOLD

TO SC/RC BY THE BANK (BONDS, DEBENTURES OR TO SC/RC BY THE BANK (BONDS, DEBENTURES OR SECURITY RECEIPTS) TO BE CLASSIFIED AS SECURITY RECEIPTS) TO BE CLASSIFIED AS INVESTMENTS.INVESTMENTS.

NO NEGOTIATION/TRANSFER AT A CONTINGENT PRICE NO NEGOTIATION/TRANSFER AT A CONTINGENT PRICE BUT IN ALL CASES, AGREEMENT WITH THE SC/RC BUT IN ALL CASES, AGREEMENT WITH THE SC/RC SHOULD PROVIDE FOR SHARING OF SURPLUS SHOULD PROVIDE FOR SHARING OF SURPLUS REALISATION IN AGREED PROPORTION REALISATION IN AGREED PROPORTION

SCs/RCs WILL NOT TAKE OVER THOSE FINANCIAL SCs/RCs WILL NOT TAKE OVER THOSE FINANCIAL ASSETSASSETS

WHICH CANNOT BE REVIVED BUT MAY ACT AS WHICH CANNOT BE REVIVED BUT MAY ACT AS RECOVERY AGENT FOR A FEE.RECOVERY AGENT FOR A FEE.

SECURITISATION & ASSET SECURITISATION & ASSET RECONSTRUCTION COMPANIES : ISSUES RECONSTRUCTION COMPANIES : ISSUES FOR CONSIDERATIONFOR CONSIDERATION• PROFESSIONAL APPROACH - SPECIALISED SKILLSPROFESSIONAL APPROACH - SPECIALISED SKILLS• EXPEDIENT REDUCTION IN NPAsEXPEDIENT REDUCTION IN NPAs• MORE APPROPRIATE WHERE WE ARE WC LENDERS MORE APPROPRIATE WHERE WE ARE WC LENDERS

AND HAVE NO SIGNIFICANT FIXED AND HAVE NO SIGNIFICANT FIXED ASSETS/COLLATERAL SECURITYASSETS/COLLATERAL SECURITY

• RECYCLING OF BLOCKED FUNDSRECYCLING OF BLOCKED FUNDS• OUTSOURCING RISKSOUTSOURCING RISKS• TRANSPARENCY AND ACCOUNTABILITY ISSUESTRANSPARENCY AND ACCOUNTABILITY ISSUES• INTER-CREDITOR ISSUES : ALLOCATION OF INTER-CREDITOR ISSUES : ALLOCATION OF

DETERMINED VALUE AMONG LENDERSDETERMINED VALUE AMONG LENDERS• VALUATION : UPFRONT LOSSES; STATUTORY/ VALUATION : UPFRONT LOSSES; STATUTORY/

EMPLOYEE DUES; INTERESTS OF OTHER STAKE-EMPLOYEE DUES; INTERESTS OF OTHER STAKE-HOLDERSHOLDERS

• STAMP DUTY ON ASSIGNMENT OF LOANSSTAMP DUTY ON ASSIGNMENT OF LOANS

SCs & RCs : ISSUES FOR SCs & RCs : ISSUES FOR CONSIDERATIONCONSIDERATION

• BALANCE-SHEET MANAGEMENT : IMMEDIATELY BALANCE-SHEET MANAGEMENT : IMMEDIATELY CLEANSES BALANCE SHEET; IMPROVEMENT IN CAPITAL CLEANSES BALANCE SHEET; IMPROVEMENT IN CAPITAL ADEQUACY RATIOADEQUACY RATIO

• EASE OF DECISION MAKING vs. RISK IN TRANSFER OF EASE OF DECISION MAKING vs. RISK IN TRANSFER OF DECISION MAKING POWERDECISION MAKING POWER

• LOSS OF OPPORTUNITY FOR A NEGOTIATED LOSS OF OPPORTUNITY FOR A NEGOTIATED SETTLEMENTSETTLEMENT

• RBI HAS TO ISSUE GUIDELINES FOR CHANGE/TAKE-RBI HAS TO ISSUE GUIDELINES FOR CHANGE/TAKE-OVER OF MANAGEMENTOVER OF MANAGEMENT

• LOW CAPITAL BASE OF SCs/RCs : ABSENCE OF LOW CAPITAL BASE OF SCs/RCs : ABSENCE OF MARKET/ INVESTORS FOR SECURITISED NPAsMARKET/ INVESTORS FOR SECURITISED NPAs

• LIQUIDITY ISSUES - REALISABILITY OF DUES IN LIQUIDITY ISSUES - REALISABILITY OF DUES IN HARDCORE/ DIFFICULT CASESHARDCORE/ DIFFICULT CASES

• INCOMPLETE/FLAWED/ INCONSISTENT INCOMPLETE/FLAWED/ INCONSISTENT DOCUMENTATION.DOCUMENTATION.

• VIOLATION OF PRINCIPLE OF TRUE SALE?VIOLATION OF PRINCIPLE OF TRUE SALE?

SCs & RCs : ISSUES FOR SCs & RCs : ISSUES FOR CONSIDERATIONCONSIDERATION

• MARKETABILITY/ REDEMPTION OF BONDS, MARKETABILITY/ REDEMPTION OF BONDS, DEBENTURES OR SECURITY RECEIPTS RECEIVED IN DEBENTURES OR SECURITY RECEIPTS RECEIVED IN CONSIDERATION FROM SCs/RCs AND NORMS FOR CONSIDERATION FROM SCs/RCs AND NORMS FOR THEIR CLASSIFICATION IN THE BANKS’ BALANCE THEIR CLASSIFICATION IN THE BANKS’ BALANCE SHEETS IN THE CASE OF DEFAULT BY SCS/RCS SHEETS IN THE CASE OF DEFAULT BY SCS/RCS

• ABSENCE OF FORECLOSURE/BANKRUPTCY LAWS; ABSENCE OF FORECLOSURE/BANKRUPTCY LAWS; LEGAL OPTIONS AVAILABLE TO DEFAULTER-LEGAL OPTIONS AVAILABLE TO DEFAULTER-BORROWERS TO STALL ACTION UNDER THE SRESI ACT BORROWERS TO STALL ACTION UNDER THE SRESI ACT (RELIEF UNDERTAKING ACTS, LABOUR LAWS ETC(RELIEF UNDERTAKING ACTS, LABOUR LAWS ETC.).)

• TIME FACTOR - LAW vs. PRACTICABILITY OF RECOVERY TIME FACTOR - LAW vs. PRACTICABILITY OF RECOVERY MECHANISM; MORE TIME (2-5 YEARS) NEEDED FOR MECHANISM; MORE TIME (2-5 YEARS) NEEDED FOR RECOVERY THROUGH LELAL PROCESS; NPA RECOVERY THROUGH LELAL PROCESS; NPA RESOLUTION THROUGH DISCOUNTED PAY-OFF, LOAN RESOLUTION THROUGH DISCOUNTED PAY-OFF, LOAN RESTRUCTURING OR SALE OF COLLATERAL.RESTRUCTURING OR SALE OF COLLATERAL.

THANK YOU

&

HAVE A NICE DAY

STATE BANK LEARNING CENTRE, RANCHI