In a bid to strengthen the recovery mechanism for Multi-State Cooperative Societies (MSCS), P.R.V.P.S. Raju, Chairman of Hyderabad-based Citizen Cooperative Society, advocated for applying the SARFAESI Act to these societies.
He emphasized that extending the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act to MSCS would enhance their ability to recover loans and tackle bad debts more effectively.
Raju highlighted this during the 48th Annual General Meeting of NAFCUB, held at the NCUI Auditorium on Saturday.
He explained that the current recovery process for MSCS, involving arbitration and lengthy legal procedures, leads to delayed recoveries and rising overdues and also pointed out that under the newly amended MSCS (Amendment) Act 2023, stricter prudential norms and a five-year compliance period, including the NPA norms, have been introduced. Given the current mechanism, meeting these norms will be challenging.
Raju proposed that extending the provisions of the SARFAESI Act, which applies to banks and MSCS, would strengthen the recovery system and make it easier to comply with the new regulatory requirements.