Government banks in view of increasing bad debts have started e-action of properties of defaulting customers.
Minister of state for finance, Mr. Namo Narain Meena said, "In line with the instructions from government, public sector banks (PSBs) have already finalized the service providers for e-auctions and many banks have started conducting e-auctions of immovable properties under SARFAESI Act".
The issue was discussed during the meeting of general managers of all public sector banks which was held on November 14th, 2012 where all PSBs were suggested to carry out e-auctions of immovable properties, under the Securitization and Reconstruction of the Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act).
The e-auction was the most preferred mode as the government thinks that this will be free, fair and transparent.
The PSBs are facing crisis of loan turning bad due to the macro-economic situation in the country. Loan default in these banks have gone up from Rs 94,000 crore in 2011 to Rs 1.70 lakh crore as on September 2012.
The government has also asked banks to take new initiatives to increase the pace of recovering and manage NPAs.