Banks may show photos of assets to be auctioned – The Economic Times

 Soon, banks may show photographs of properties that they put up for auction, along with relevant documents, just like some of the real estate portals do as the government wants lenders, who seize assets of loan defaulters, to improve the e-auction process. While banks routinely auction factories and plants of corporate loan defaulters, in recent years, apartments and villas of home loan defaulters have also entered the market and banks are already using the e-auction route. “In the absence of reliance on modern techniques, the gains are limited and potential buyers often do not have details like what is available on other sites,” said a finance ministry official.

As a result, public sector banks have been advised to put in place an auction marketplace with tools such as photographs of the property as well as crucial documents. The idea is to enable someone sitting in Chennai or Chandigarh take a preliminary look at the property that is being auctioned in Delhi or Mumbai. “This will help expand the customer base, improve the quality of bids and help banks improve the recoveries,” financial services secretary Rajiv Kumar told TOI.

The instructions are part of the revamp of debt recovery tribunals, where the government has initiated several steps, including increasing the pecuniary limit for filing cases from Rs 10 lakh to Rs 20 lakh as part of an unclogging drive. At the end of June, over 38,000 cases were pending before the DRTs, of which 38% were between Rs 10 lakh and Rs 20 lakh, although in value terms this segment’s share was only 4%. With fewer cases, the government is hoping for faster recovery.

Similarly, states have been asked to instruct district magistrates (DMs) to pass orders on secured asset seizure within 60 days of banks initiating action. But the DMs have been slow, leaving nearly 10,000 applications pending. “This is part of the overall strategy, which includes the insolvency law and several other steps. Defaulters have no choice but to pay up,” Kumar said.