Banks, companies cannot seize leased vehicles arbitrarily – State Minister
Vehicles can be seized by Banks and leasing companies in the case of non-payment of dues only with the consent of the current owner of the vehicle,” State Finance Minister Dr. Ranjith Siyambalapitiya told Parliament yesterday.
He said that vehicles with defaulted installment payments are not seized under the Parate law.
The Minister said this in Parliament yesterday making a statement regarding the Parade law.
The Minister emphasized that under Parate powers, a bank or a financial institution can seize property only if the relevant loan amount exceeds Rs.5 million.
The State Minister also said that the percentage of non-performing loans in banks, which was 4.8 percent in January 2021, has increased to 13.4 percent by June 2023. He said that this is a very serious situation and in such a case, giving up the powers of parade is one of the main reasons for reducing the bank’s ability to recover its debts, and this raises the risk of the bank becoming bankrupt due to the increase in the credit risk of the bank.
However, the bank is taking action to seize the property through Parate powers when there is no other option to recover the related debt. According to the internal processes of the banks., debt recovery will be done through measures such as loan rescheduling after debt restructuring is inactive, the Minister said. The Minister pointed out that the seizure of property under Parate’s powers is for customers who willfully default on their loans and entrepreneurs who have failed to recover these businesses at all.
The Minister said 19 banks and financial institutions had implemented the Parate law only on 173 occasions for loans for a tune of Rs.15 billion from January to June this year.
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