Urgent Call to Action: Finance Ministry Presses Banks and DRTs to Accelerate Loan Recoveries | Crucial Banking Update
Finance Ministry Urges Alternative Dispute Resolution to Alleviate DRT Backlog
The Union Finance Ministry has called on banks and Debt Recovery Tribunals (DRTs) to engage with borrowers outside the tribunals to address the significant backlog of pending cases. A senior finance ministry official, speaking anonymously to Business Standard, conveyed that small-value cases, starting from Rs 20 lakh to Rs 1 crore, constitute roughly 75% of the total cases pending in DRTs. The ministry suggested exploring alternative dispute resolution mechanisms, such as Lok Adalats, to expedite the settlement of these cases.
To further reduce congestion, banks and DRTs have been advised to prioritize high-value cases—those above Rs 100 crore. Three specific DRTs in Delhi, Mumbai, and Chennai have been earmarked to exclusively handle these high-value cases.
Currently, 39 DRTs and five Debt Recovery Appellate Tribunals (DRATs) operate nationwide, each led by a presiding officer and a chairperson, respectively. The Secretary of the Department of Financial Services, M Nagaraju, chaired a recent conference in New Delhi, emphasizing the need for banks to reevaluate conventional recovery methods. The meeting also included senior officers from public and private banks and the Indian Banks’ Association’s deputy CEO.
Banks have also been encouraged to withdraw long-pending cases with minimal recovery prospects, to reduce unnecessary backlog. As of January 24, 2024, there were 215,431 cases pending before DRTs, with 185,076 cases pending for over 180 days.
The Finance Ministry has directed DRTs to uphold natural justice principles and adopt summary procedures to enhance efficiency. Ongoing measures, including capacity building and training, are also being reinforced to ensure the DRTs operate effectively.
First Published: Sep 21, 2024 | 8:30 PM IST
Original Story https://www.business-standard.com/industry/banking/finance-ministry-urges-drts-banks-to-expedite-loan-recovery-processes-124092100715_1.html
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