Key Points
The Association of Asset Reconstruction Companies (ARCs) has sought the finance ministry's intervention to issue advisory to state governments to direct authorities to build in adequate safeguards in initiating criminal cases against lenders and its officials while pursuing their duty as per prescribed recovery norms...
The industry has raised concerns over criminal action against ARC officials despite their merely following due process of law as mandated in IBC and Sarfaesi...
Despite this, creditors are being implicated in various criminal charges by borrowers and related vested interests to delay and derail the recovery process and create a sense of fear in follow up and recovery of bad loans and pressurise the ARCs...
In keeping with the spirit of this provision, ARCs want the government to issue appropriate advisory to relevant authorities to exercise restraint in initiating criminal cases against individual employees of creditors who are merely following a permissible recovery mechanism in compliance with law..
However, only when mala fide intent and criminality in conduct of the officials or the institution is established beyond doubt, a criminal case against an institution or individual pursuing legitimate avenues of recovery or resolution should be filed...
