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Sarbajeet K. Sen

Officials said that the Government was keen that the Bill sailed through Parliament at the earliest since the resultant Act would provide the legal backing to the functioning of the ARC that is to be set up by June this year.

NEW DELHI, May 14

A NATIONAL Registry to record high-value financial transactions is to be set up by the Government under the proposed new legislation for securitisation and reconstruction of financial assets of the banking system.

The new registry would record all securitisation transactions undertaken under the provisions of the proposed Act as well as deals made by Asset Reconstruction Companies (ARCs) that would come up subsequent to the passage of the legislation.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Bill, 2002, was recently cleared by the Union Cabinet. The Bill is likely to be introduced in Parliament in the fag end of the current session.

"By providing a forum for recording transactions, the National Registry would increase the comfort of the lending institutions which in the long run would also facilitate their lending operations,'' a senior Finance Ministry official told Business Line.

He said that the Bill also addressed the issue of high stamp duties prevalent in many States which the banking industry feared could become a stumbling block to the transfer of assets during the process of reconstruction of bad loans.

Officials said that the new Bill had incorporated provisions for enforcement of securities by banks and financial institutions without the intervention of courts, thereby substantially reducing the time required for doing the same. Besides the above, the Bill would also provide a legal framework for the working of ARCs which would take over the bad assets of banks and institutions at a discounted price and try to make recoveries of the same.

Officials said that the Government was keen that the Bill sailed through Parliament at the earliest since the resultant Act would provide the legal backing to the functioning of the ARC that is to be set up by June this year. "The ARC would find it difficult to commence transactions without the enabling provisions that have been incorporated in the Bill,'' officials said.

The task of doing the groundwork for the pilot ARC is being handled by ICICI Ltd. Officials said that feedback received from the FI suggests that the plans are well on course. "We may even announce the setting up of the pilot ARC before the June 30 deadline announced in the Budget,'' officials said.

A large number of banks, financial institutions and a couple of multilateral institutions are likely to join hands in participating in the equity of the pilot ARC.

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