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Madras HC gives a thumbs up to e-auction of NPAs; Here’s why we need it

Madras High Court has passed a judgement that e-auction of Non Performing Assets (NPAs) will not be challenged, reports The Economic Times. Note that the Ministry of Finance had made it mandatory for all commercial banks to move from physical auctions to e-auction mode for all NPA cases under the Debt Recovery Tribunal a while back. The court judgement was for a writ petitions brought up by a slew of borrowers such as the Tamil Nadu Organic, Gangtori Textiles, Yoga Nectar Ayurceuticals and D R Logistics Pvt. The petitions were against the State Bank of India, the Central Bank of India, the Indian Bank, the Union Bank of India, other public sector banks and the ICICI Bank. The petitioners had argued that under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFEISI) Act which deals with bad loans, does not allow e-auction while it permits public auction, due to which  e-auction should be considered illegal. The petitioners also claimed that there was no transparency in the e-auction process. They also argued that people in rural areas will not be able to participate in these auctions due to low literacy level. Business Standard reports that more than 50% of NPA properties being e-auctioned are from tier-II cities like Jabalpur, Chandrapur, Aurangabad, Bhilwara, Hubli, Dharwad, Erode, Dharmapuri, Bhavnagar, Valsad, Gandhidham, Ujjain, Kannur, Kolhapur and Satara, amongst others. Banks have been using e-auctions for the past couple of years and the court said that, "the process of e-auction sale, followed…

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