New Delhi, Oct 05: Conceding to the bankers' demands, the government has decided against a separate legislation for lenders' liability, apprehending that it would lead to more litigation hampering banking operations in the country. "We are not in favour of lenders' liability as it may lead to lot of litigation," Banking Secretary N S Sisodia said here.
"We feel a new law is not necessary as it can only create more problems rather than solve them. It may have hampering effect on banking operations," he said.
Instead, he said, the government preferred lenders' liability code. RBI has already notified this code which the government feel is enough to ensure discipline that is required of lending institutions.

In the wake of mounting non-performing assets of banks and FIs totalling over Rs 100,000 crore, a legislation on lenders' liability was contemplated to counter-balance the power of the lenders to take over and dispose of assets of loan defaulters under the Securitisation Act.
Top executives of public and private-sector banks told PTI that such a legislation would not only make the credit delivery mechanism sticky but also would add to compliance costs of the lending entities. Bureau Report