‘Law enacted in 1908 proves pain point for asset rejig companies’

MUMBAI: A century-old law is holding back India’s efforts to recover bad loans. Asset reconstruction companies (ARCs) say a provision in the Indian Registration Act of 1908, which requires them to register every loan transfer with state registrars, persists despite the creation of a centralised digital alternative more than a decade ago.Each time an ARC buys a bad loan from a bank, it must record the transaction twice, once with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI), and again with the state registration office where the property is located. The process, often involving physical paperwork across multiple districts, has become an anachronism in a digital financial system.“Govt should, in the interest of ease of doing business and faster resolution of stressed assets, accept the recommendation made by the 2011 ARC sector committee,” said Hari Hara Mishra, CEO of the Association of ARCs in India. “Assignment Agreements already recorded with CERSAI should not require further state-level registration.” The duplication, ARCs argue, inflates costs, clogs resolution process and slows down recoveries.