State

NLA: SARFAESI Act referred to House Select Committee

Correspondent KOHIMA, FEB 15 (NPN) | Publish Date: 2/15/2021 1:12:40 PM IST

Due to the complexities involved in implementing SARFAESI Act, 2002, Nagaland Legislative Assembly (NLA) Monday referred the matter to House Select Committee to study the Act in consultation with legal experts.

After prolonged discussion, leader of the house and chief minister, Neiphiu Rio agreed to leader of the opposition, T.R. Zeliang’s proposal to refer the matter to House Select Committee for seeking legal opinion and more discussion. Rio asserted that there was no differences between the opposition and ruling benches over the SARFAESI Act. The house unanimously agreed to the proposal.

Explaining the advantages and implications involved in implementing SARFAESI Act, leader of opposition, T.R. Zeliang said the Act gave the power to “seize and desist” to banks, which can give a notice in writing to the defaulting borrower requiring him or her to discharge the liabilities within 60 days. 

But if the borrower fails to comply with the notice, the bank can take possession of the security for the loan, sell or lease or assign the right over the security, manage the same or appoint any person to manage it, he added. Zeliang recalled that when this Act was passed in 2002 by Parliament, NLA had remained silent – neither opposed nor supported it. He said the problem arose when law & justice deputy secretary wrote to finance secretary pointing out that the Act could not be made applicable in Nagaland, adding that the letter was copied to state level bankers’ committee. This was the root cause for not being able to implement the Act, he added.. 

After July 19, 2019, he said no bank or financial institution was willing to extend loan, which affected entire people of the State. 

He maintained that there were two dimensions – whether to accept Act and implement it in toto or reject and go with the State’s own Act in this regard. 

Being a Central law, Zeliang observed that NLA had no authority to it and warned against making any amendment as this could land the State in trouble. 

Earlier, planning & coordination, land revenue and parliamentary affairs minister Neiba Kronu initiated the discussion on the matter of urgent public importance pertaining to SARFAESI Act under Rule-50.

He stressed that the Act must be thoroughly discussed as it empowered banks to confiscate land and sell it to recover unpaid loans without court interference. 

Minister Jacob Zhimomi said there was a need for few changes in the SARFAESI Act as certain provisions could not be agreed in the present form due to the land holding system in Nagaland under Article 371 (A). 

Zhimomi said the State government had to protect land and its people, but also help young and aspiring entrepreneurs to avail loan for business start-ups. Therefore, he called for necessary amendments whereby land could be sold, but only to indigenous inhabitants of the State. He suggested fixing a reserved price for banks in such a manner that the banks could also recover their loans with interest.

In response to the discussion, leader of the House and chief minister Neiphiu Rio thanked the members for their participation and reminded them of their equal shared responsibility regarding the Act.

Speaking on various facets pertaining to the Act, Rio informed the House that the banks were requesting its implementation and expressed their unwillingness to extend loans, if it was not implemented, as they were required by the Act to give loans against mortgage of immovable properties and fixed assets, including land. And in case of non-payment of loans, they could take possession of the mortgaged assets and auction them to recover the loans.

Opposition member Yitachu, advisers KT Sukhalu and Zhaleo Rio also joined the discussion.

 

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