Defaulting borrowers have been truly put on notice as the recent cheque bounce ordinance will have retrospective application.
This
ordinance--issued on June 15—has made it clear that all pending cheque
bounce cases should be transferred to the jurisdictional court where the
cheque is presented.
This
move to bring all pending cases under the jurisdiction mentioned in the
ordinance augurs well for recovery of loans/advances, say
representatives of the asset financing non banking finance companies
(NBFCs).
“It
will send the right message to defaulting borrowers. The law has to be
on the side of the person who is suffering (lender unable to recover his
money)”, Raman Aggarwal, Director, Finance Industry Development
Council, told Business Line here.
This
ordinance is a step in the right direction as the entire system is now
looking at early signals of stress and taking early remedial action
rather than waiting for asset to turn into a non-performing asset and
then take an action, he said.
FIDC is a self regulatory organisation representing asset financing NBFCs.
This
ordinance is a big relief and a welcome development for all as it shall
not only clear the confusion created by the Supreme Court order but
also enable banks and NBFCs to use Sec 138 effectively, sources in the
banking industry said.
The
apex court ruling was given in the context of traditional method of
cheque clearance where the cheque (instrument) physically travels from
the bank branch where it is presented to the drawee bank
t the 2010 audit in the 
