MUMBAI, July 1: A meeting between the finance ministry and officials of financial institutions is reported to have expressed grave apprehensions about the level of non-performing assets in FIs.

Financial institutions' officials are now supposed to be trying to devise means by which they can realise their collateral in a shorter time. There is precious little the FIs, or for that matter the banks, can do. As a matter of fact, one of the reasons for the high level of NPAs is that the security for loans in this country is largely notional.

Even if all the documents are in order, getting a decree can take a decade or longer. By that time not only is the primary security useless, even the collateral may have depreciated in value. And even if the decree is obtained executing the decree is another tedious legal process. As a matter of fact, most of the advances in this country are secured. Even in the case of priority sector advances, where collateral is not necessary, personal guarantees are obtained. These allow creditors to obtain injunctions against disposing off the personal assets of debtors. While these injunctions are obtained readily enough, the actual case takes its usual tortuous course. Unless a way is found to speed up the legal process, therefore, the delay will mean that a large amount of funds in this capital-scare country will remain locked up in unproductive uses. Nor will tribunals solve the problem. What is needed is a thorough-going reform of the legal process.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.