HC notice to Centre over NPA defination in SRFAESI Act

...."The section 2 (O) of the Securitisation Act 2002,is unconstitutional as it is arbitrary and unreasonable. It refers to RBI guidelines, which has a definition which is completely in contrast to the one stated in the Act," the petition read. "The section relies on what is sub standard, loss making and doubtful account to understand the term NPA, while the RBI guideline relies on NPA to explain what is Sub Standard, loss making and doubtful account. Thus the whole definition is arbitrary and unreasonable," it added. The petitioner further said, "The definition as stated in section 2 (O) empowers the bank to declare any account as NPA as per its whims and fancies. The delegation of power on the bank to declare a account NPA as per the definition which relies on RBI Guidelines which are ambiguous and contradictory to the definition stated in Securitization Act. Thus the section 2 (O) is required to be declared unconstitutional.".....

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