NEW DELHI: The Finance Ministry has constituted a panel to give more teeth to the debt recovery laws to effectively deal with wilful defaulters and check bad loans which have soared to Rs 2.40 lakh crore.
A panel has been constituted by Department of Financial Services for suggesting changes in the existing laws to make debt recovery more effective, sources said.
The members of the panel entrusted to revisit existing debt recovery laws include Anurag Jain, Joint Secretary Department of Financial Services, Former law Secretary V K Bhasin, representatives of DRT, RBI, IBA and bar associations, sources added.
Besides, panel has been also assigned to draft as new statute with harsh penal provisions for wilful defaulters.
The panel was set up to plug the loopholes in the current legal framework for debt recovery.
According to sources, there has been instances of promoters getting rich and companies becoming bankrupt and defaulting on bank loan repayment.
The committee constituted would suggest amendments in Sarfaesi Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act) and RDDB Act (Recovery of Debts Due to Banks and Financial Institutions).
Among other things, the panel would also recommend making penal provisions more stringent in case of wilful defaulters.
Noting that the rising Non Performing Assets (NPAs) of public sector banks is a matter of concern for the government, Financ ..
Among other things, the panel would also recommend making penal provisions more stringent in case of wilful defaulters.
Noting that the rising Non Performing Assets (NPAs) of public sector banks is a matter of concern for the government, Financ ..
Study: 35 per cent Americans in US facing debt collectors
WASHINGTON: More than 35 per cent of Americans have debts and unpaid bills that have been reported to collection agencies, according to a study released Tuesday by the Urban Institute.
These consumers fall behind on credit cards or hospital bills. Their mortgages, auto loans or student debt pile up, unpaid. Even past-due gym membership fees or cellphone contracts can end up with a collection agency, potentially hurting credit scores and job prospects, said Caroline Ratcliffe, a senior fellow at the Washington-based think tank.
Roughly, every third person you pass on the street is going to have debt in collections," Ratcliffe said. "It can tip employers' hiring decisions, or whether or not you get that apartment."
The study found that 35.1 per cent of people with credit records had been reported to collections for debt that averaged $5,178, based on September 2013 records. The study points to a disturbing trend: The share of Americans in collections has remained relatively constant, even as the country as a whole has whittled down the size of its credit card debt since the official end of the Great Recession in the middle of 2009.
As a share of people's income, credit card debt has reached its lowest level in more than a decade, according to the American Bankers Association. People increasingly pay off balances each month. Just 2.44 per cent of card accounts are overdue by 30 days or more, versus the 15-year average of 3.82 per cent.
Yet roughly the same per centage of people are still getting reported for unpaid bills, according to the Urban Institute study performed in conjunction with researchers from the Consumer Credit Research Institute. Their figures nearly match the 36.5 per cent of people in collections reported by a 2004 Federal Reserve analysis.
All of this has reshaped the economy. The collections industry employs 140,000 workers who recover $50 billion each year, according to a separate study published this year by the Federal Reserve's Philadelphia bank branch.
The delinquent debt is overwhelmingly concentrated in Southern and Western states. Texas cities have a large share of their populations being reported to collection agencies: Dallas (44.3 per cent); El Paso (44.4 per cent), Houston (43.7 per cent), McAllen (51.7 per cent) and San Antonio (44.5 per cent).
Almost half of Las Vegas residents_ many of whom bore the brunt of the housing bust that sparked the recession_ have debt in collections. Other Southern cities have a disproportionate number of their people facing debt collectors, including Orlando and Jacksonville, Florida; Memphis, Tennessee; Columbia, South Carolina; and Jackson, Mississippi.
Other cities have populations that have largely managed to repay their bills on time. Just 20.1 per cent of Minneapolis residents have debts in collection. Boston, Honolulu and San Jose, California, are similarly low.
Only about 20 per cent of Americans with credit records have any debt at all. Yet high debt levels don't always lead to more delinquencies, since the debt largely comes from mortgages.
An average San Jose resident has $97,150 in total debt, with 84 per cent of it tied to a mortgage. But because incomes and real estate values are higher in the technology hub, those residents are less likely to be delinquent.
By contrast, the average person in the Texas city of McAllen has only $23,546 in debt, yet more than half of the population has debt in collections, more than anywhere else in the United States.
The Urban Institute's Ratcliffe said that stagnant incomes are key to why some parts of the country are struggling to repay their debt.
Wages have barely kept up with inflation during the five-year recovery, according to Labor Department figures. And a separate measure by Wells Fargo found that after-tax income fell for the bottom 20 per cent of earners during the same period.
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