Saturday, January 31, 2015

Provisions to Securitisation Trusts [As introduced by the Finance Act, 2013]

Provisions to Securitisation Trusts [As introduced by the Finance Act, 2013]

It contains the following provisions:—
(a)        registration and regulation of Securitisation companies or reconstruction companies by the RBI;
(b)       Facilitating Securitisation of financial assets of banks and financial institutions with or without the benefit of underlying securities;
(c)        Facilitating easy transferability of financial assets by the company or reconstruction company to acquire financial assets of banks and financial institutions by issue of debentures or bonds or any other security in the nature of a debenture;
(d)       empowering Securitisation companies or reconstruction to raise funds by issue of security receipts to qualified institutional buyers;
(e)        facilitating reconstruction of financial assets acquired by exercising powers of enforcement of securities or change of management or other powers! which are proposed to be conferred on the banks and financial institutions;
(f)        declaration of any Securitisation company or reconstruction company registered with the RBI as a public financial institution for the purpose of section 4A of the Companies Act, 1956
(g)       defining security interest’ as any type of security, including mortgage and changeon immovable properties given for due repayment of any financial assistance given by any bank or financial institution;
(h)       empowering banks and financial institutions to take possession of securities given for financial assistance and sell or lease the same or take over management in the event of default, i.e., classification of the borrower’s account as non-performing asset in accordance with the directions given or guidelines issued by the RBI from time to time;
(i)         the rights of a secured creditor to be exercised by one or more of its officers authorised in this behalf in accordance with the rules made by the Central Government;
(j)         an appeal against the action of any bank or financial institution to the concerned Debts Recovery Tribunal and a second appeal to the Appellate Debts Recovery Tribunal;
(k)        setting up or causing to be set up a Central Registry by the Central Government for the purpose of registration of transactions relating to Securitisation, asset reconstruction and creation of security interest;
(I)         application of the proposed legislation initially to banks and financial institutions and empowerment of the Central Government to extend the application of the proposed legislation to non-banking financial companies and other entities
(m)      non-application of the proposed legislation to security interests in agricultural lands, loans not exceeding rupees one lakh and cases, where 80% of the loans are repaid by the borrower.