At present, banks and FIs are given powers of enforcement only forindustrial concerns. "Since this excludes a large part of their loanportfolio, it is necessary to cover all types of lending activities of thebanks for granting powers to enforce securities", the committee has said.

The ten-member committee headed by former solicitor general TR Andhyarujinain its report submitted to finance minister Yashwant Sinha on Wednesday alsorecommended more teeth for the Debt Recovery Tribunals (DRTs) to effectivelydeal with the problem concerning non-performing assets. The committee wasappointed in February 1999 to formulate specific proposals to give effect tothe suggestions made by the Narasimham panel regarding changes in the legalframework for the banking system. The committee further argued that banksand financial institutions mainly deal with public funds and hence theyshould be adequately empowered to enforce mortgage without intervention ofthe court. These powers should be conferred on the banks and financialinstitutions through a separate legislation. It suggested that, "the newspecial law may provide that notwithstanding anything contained in theTransfer of Property Act 1882, mortgage by deposit of the title deeds infavour of banks and financial institutions can be created at any place inIndia and the mortgager can grant power of sale without intervention ofcourt in favour of mortgagee."

After examining various legal initiatives for the growth and development ofsecuritisation so as to benefit and foster development of debt markets, thecommittee recommended that, "each stage of securitisation-like the transferor assignment or vesting or transmission of financial assets, the form andthe nature of special purpose vehicles, the issue of transferablereceipts-should be enunciated in the draft Securitisation Bill."

The committee suggested that the term "reasonable period" in section 28 ofthe Indian Contract Act 1972 should be specified. It said that one yearwould be reasonable for banks and financial institutions to enforce theirrights under the guarantee after the happening of the specified event. Asfar as DRTs were concerned, the committee suggested that, "powers which arenecessary and which contribute to the expeditious disposal of theproceedings should be expressly conferred under the DRT Act."

The tribunal, the report said, should appoint a receiver as a normal ruleunless found not necessary. For effective implementation of the orders ofthe DRTs, the committee suggested that the power of punishing for contemptshould be conferred on these tribunals.

The committee further recommended that a new section should be inserted inthe DRT Act, casting an obligation on the Reserve Bank to constitute asinfrastructure fund for the tribunals and appellate tribunals to ensure andfacilitate administrative and infrastructure requirement of the tribunals.The Government, it said, should also consider changing the set up of thetribunal to include a member having expertise in project financing,securitisation and new kinds of debt instruments.