 bill no 43 of  2014 the public sector banks (control of non-performing assets) bill, 2014 by shri bhartruhari mahtab, mp a billto deal  with the non-performing assets of public sector banks and for matters connected therewith or incidental theretobe it enacted by parliament in the sixty-fifth year of the republic of india as follows:—1  (1) this act may be called the public sector banks (control of non-performingassets) act, 2014short title, extent and commencement(2) it extends to the whole of india5(3) it shall come into force on such date as the central government may, by notificationin the official gazette, appointdefinitions2 in this act, unless the context otherwise requires,—(a) "bank" means a scheduled bank included in the second schedule to the reserve bank of india act, 1934;(b) "non-performing assets" means any loans or advances in respect whereof the repayment of principal or the payment of interest has remained overdue for not less than ninety days;(c) "prescribed" means prescribed by rules made under this act; and5(d) "public sector bank" means a scheduled commercial bank in which the central government, or one or more state governments, or the central government and one or more state governments jointly hold not less than fifty-one per cent of its paid up equity share capital103 (1) every public sector bank shall constitute a committee to be known as the stressed assets management committee to identify, monitor and for overall management of the cases of non-performing assets;stressed assets management committee(2) the committee shall,—15(i) look into the specific cases of non-performing assets of every bank where the amounts of assets involved exceeds such amount as may be specified by notification issued by the central government and suggest ways and means for recovery of such assets;(ii) remit such cases to the restructure committee constituted under section 5where it is satisfied that the stressed assets cannot be recovered in accordance with the terms of the existing agreement with the borrower;20(iii) report to the management of the bank in cases where it believes that an officer of the bank has failed to exercise due diligence in sanctioning any loans or advances which has resulted in creating non-performing assets; and54 of 200251 of 199325(iv) recommend initiation of legal proceedings under the securitisation and reconstruction of financial assets and enforcement of security interest act, 2002 or the recovery of debts due to banks and financial institutions act, 1993 or any other law for the time being in force for recovery of stressed assets by a bank, if it is satisfied that such action is necessary for such recovery 4 it shall be the duty of every branch manager to report every case of non-performing assets to the stressed assets management committee constituted under section 3 in such manner as may be prescribed30reporting of nonperforming assetsrestructure committee5 (1) each public sector bank or two or more public sector banks shall jointly constitute a restructure committee(2) the committee shall consist of such number of members as may be nominated by the bank or banks concerned35(3) the committee shall examine every case remitted to it by the stressed assets management committee and recommend suitable restructuring of loans and advances keeping in view the operational sustainability and profitability of the underlying projects and such other factors as it may deem fitdebt advisory committee406 (1) the central government shall, as soon as may be, constitute a committee to becalled the debt advisory committee(2) the committee shall consist of a chairperson and four other members(3) the chairperson and other members of the committee shall be eminent economists having experience of not less than ten years in the filed of banking, finance or economics45(4) the committee shall appoint such officers and employees as are necessary for effective discharge of its functions under this act(5) the committee shall frame guidelines and principles governing the following:—(a) pre-sanction appraisal of solvency of prospective borrowers and liquidityand profitability aspects of the purpose for which loan or advance is sought;(b) post-disbursement monitoring of projects by lender bank;5(c) sectoral aspects of risk assessment for projects and provisioning requirementsfor loans and advances to different sectors; and(d) such other matters as may be referred to it by the reserve bank of india or thecentral government or any public sector bankwilful default by borrowers10 157 (1) a borrower shall be deemed to be a wilful defaulter if he defaults in payment of any amount due to a public sector bank in respect of any loans or advances, when he is capable, in terms of available liquidity and expected cash flows, of making such payment or where he has utilized the amount of loan for a purpose other than the purpose for which it was sanctioned(2) every case, where the amount of loans or advances involved exceeds such amount, as may be prescribed, of wilful defaulters shall be reported by each public sector bank to the debt advisory committee(3) the debt advisory committee shall maintain a central repository of information on wilful defaulters with a view to disseminate the same to all public sector banks20act to have overriding effect8 the provisions of this act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this actpower to make rules9 (1) the central government may, by notification in the official gazette, make rules for carrying out the purposes of the act2530(2) every rule made under this act shall be laid, as soon as may be after it is made,before each house of parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both houses agree in making any modification in the rule or both the houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule statement of objects and reasonsthe global recessionary trends have insidiously made their way into the indian economy among the foremost indicators of slowdown in indian economy is the rising proportion of non-performing assets in the banking sector the public sector banks, which are largely funded by public money, have seen escalating exposure to non-performing assets in the interest of security of public money invested in public sector banks, it is necessary that a dedicated mechanism is evolved to check the rise of non-performing assets of these banks2 in view of the above, the bill seeks to—(a)  provide for separate mechanism to deal with non-performing assets; (b) constitute a joint mechanism by public sector banks to consider restructuringof loans and advances;(c) provide for periodic reporting of non-performing assets;(d) provide for fixing responsibility of individual bank officers in cases wheredue diligence is not exercised by them;(e) provide for constitution of debt advisory committee to frame guidelines andprinciples governing sanctioning of loans and advances and monitoring of underlying projects; and(f) maintaining a central repository of information on wilful defaulters for disseminating the same among bankershence this billnew delhi;bhartruhari  mahtabjune 26, 2014 financial memorandumclause 6 of the bill provides for the constitution of the debt advisory committee consisting of a chairperson and four other members it also provides for appointment of officers and employees for effective discharge of functions by the committee the bill, therefore, if enacted, will involve expenditure from the consolidated fund of india it is likely to involve a recurring expenditure of about rupees ten crore per annum on account of salaries and other administrative expenses of the committeea non-recurring expenditure of about rupees five crore is also likely to be involved memorandum  regarding  delegated  legislationclause 9 of the bill empowers the central government to make, by notification in the official gazette, rules for carrying out the purposes of the billthe matters in respect of which rules may be made are matters of administrative detailsthe delegation of legislative power is, therefore, of a normal character———— a billto deal  with the non-performing assets of public sector banks and for matters connected therewith or incidental thereto————(shri bhartruhari mahtab, mp)