(a) whether the Union Government are working on a legislation to correct shortcomings in
enforcement of contracts and improve recovery from wilful defaulters;
(b) if so, the details thereof;
(c) whether the nationalised banks and financial institutions are not maintaining
transparency and accountability in their operations; and
(d) if so, the extent to which the legislation is going to maintain transparency and
accountability of banks?
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI BALASAHEB VIKHE PATIL):
(a) and (b) Government is working on a legislation for Creation and enforcement of
security interest by Banks and Financial Institutions. The proposed legislation aims to
codify and consolidate law and practice relating to creation of security interest, and
enforcement thereof by Banks and Financial Institutions without intervention of Court
and for matters connected therewith or Incidental thereto.
(c) and (d) Banks and Financial Institutions (FIs) are required to follow the guidelines
issued by Reserve Bank of India (RBI) from time to time regarding the disclosure required
to be made in the statement of accounts and also as part of `Note on Accounts` to the balance
sheet. The Notes on Accounts will inter-alia include information in respect of capital
adequacy ratio, percentage of net NPAs to net advances, amount of provisions made towards
NPA, depreciation in the value of investment, gross value of investments in India and outside
India, non-interest income, operating profit, return on assets, business per employee,
profit per employee, maturity pattern (of loans, advances, investment, securities, deposits
and borrowings), foreign currency assets and liabilities, movements in NPAs and lending to
sensitive sectors etc. The above details are also expected to improve the degree of
transparency in the affairs of banks and FIs. RBI has also appointed a Working Group on
Wilful Defaulters under the Chairmanship of Shri S.S. Kohli. The Group has recently
submitted the Report, which is being processed by RBI.