The Lok Sabha on Monday passed a Bill, which provides for expeditious recovery of bad loans by banks. The Bill, passed by voice vote, also proposes to move towards online debt recovery tribunals (DRTs). The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016, seeks to amend four laws -Securitisation and Reconstruction of Financial Assets and Enforcementof Security Interest Act, 2002 (Sarfaesi), Recovery of Debts due to Banks and Financial Institutions Act, 1993, Indian Stamp Act, 1899, and Depositories Act, 1996. The Sarfaesi Act allows secured creditors to take possession over a collateral, against which a loan had been provided, upon a default in repayment. This process is undertaken with the assistance of the district magistrate, and does not require the intervention of courts or tribunals. This process will have to be completed within 30 days by the district magistrate. The Bill also empowers the district magistrate to assist banks in taking over the management of a company, in case the company is unable to repay loans. This will be done in case the banks convert their outstanding debt into equity shares, and consequently hold a stake of 51 per cent or more in the company. The legislation also proposes to empower the Reserve Bank of India (RBI) to examine the business of asset reconstruction companies (ARCs). Besides, RBI can carry out audit and inspection of these companies. In the event of these firms failing to comply, RBI can take penal action. The Bill also provides for stamp duty exemption on loans assigned by banks and financial institutions to ARCs. These amendments will strengthen DRTs by improving their infrastructure, including computerised processing of cases. These include presentation of claims by parties and summons issued by tribunals under the Act. Changes in the Sarfaesi Act will enable non-institutional investors to invest in security receipts issued by ARCs, which buy bad loans from banks at a discount. In case of corporate bond defaults, the changes will allow bond and debenture trustees to use provisions of the Act. So far, only banks and financial institutions can use these rules in bond default cases.To expedite recovery of bad loans, the Bill enables non-institutional investors to buy ARCs' security receipts. In case of corporate bond defaults, the changes will allow bond and debenture trustees to use provisions of the Sarfaesi Act as well.