Banks want faster disposal of DRT cases

Debt Recovery Tribunals (DRTs), set up by the Centre to reduce the non-performing assets (NPAs) of banks and provide fast disposal of such cases, are functioning like normal courts, lament bankers.

A forum originally meant for the aggrieved banks, it is increasingly being approached by loan defaulters for relief from the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, popularly referred to as SARFAESI Act. The Act gives banks the power to auction the mortgaged property in question after giving a 60-day notice to the defaulter.

A senior recovery official of a leading public sector bank told Business Standard that the recovery officers (ROs) of DRTs are posted on deputation and hence they lack 'sense of belonging' to the tribunals. "Conceptually, DRTs were supposed to be fast-track courts (FTCs), but their process has become slow like normal courts," he added.

The official lamented that the prolonged hearing in the DRTs makes the cases drag for months and years, before they are finally disposed.

"The defaulters get ample time till the cases are settled and the banks incur the cost of underlying funds as NPAs," he said while suggesting that setting up more DRTs and appointment of regular ROs could partly help the situation.

Uttar Pradesh has two DRTs, at Lucknow and Allahabad. The Lucknow DRT's jurisdiction extends to the state of Uttarakhand as well. DRT Lucknow Secretary and Registrar RB Gupte said over 650 cases were currently pending with the Lucknow tribunal.

Another private sector banker affirmed although the underlying objective of the DRTs was beneficial for the banks, the process had indeed become slow to the cost of banks.

The Tribunals were established by the Centre under an Act of Parliament for expeditious adjudication and recovery of debts due to banks and FIs. The forum is also the appellate authority for appeals filed against the proceedings initiated by secured creditors under the SARFAESI Act.

With a view to suggesting measures for reducing the mounting NPAs of banks and FIs, the Centre had appointed three committees. On their recommendations, the Recovery of Debts Due to Banks and Financial Institutions Ordinance, 1993 was promulgated to provide for establishment of tribunals for expeditious adjudication and recovery of debts.

Later, the Ordinance was replaced by The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRT Act), which provides for single judicial forum for adjudication of cases as well as execution of decrees passed.

Prior to the Act, petitions had to be filed separately for adjudication of cases and execution proceedings in different courts. The Centre has been setting up DRTs and Appellate Tribunals. So far, 29 DRTs and 5 DRATs have been set up in the country.

DRT is headed by a Presiding Officer and has a Registrar, an Assistant Registrar and two ROs. Where a bank or financial institution has to recover any debt from a borrower or guarantor, it makes an application to the Tribunal against such person.

The provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 does not apply, where the amount of debt due to bank or FI is less than Rs 10 lakh.