They are launching a two-pronged attack by moving Debt Recovery Tribunals (DRTs) as well as taking action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfaesi Act) to sell off assets.
Once 75 per cent of the creditors of any company agree to take action, the matter gets out of BIFR purview and the lenders can proceed under the DRT Act.
The recovery process under the Sarfaesi Act had been halted as the Supreme Court had stayed the sale of security under the Act in the case of Mardia Chemicals vs ICICI Bank.
Unable to push the sales of assets under the Sarfaesi Act because of the court stay, banks are now following the DRT route to speed up action.
Senior bankers pointed out that around 20 cases are pending with the BIFR for abatement of proceedings. In some of the cases such as that concerning Mardia, the matter has already been abated.
Banks have been facing problems as corporates took refuge under the BIFR Act to stall proceedings under the DRT Act.
However, with the passing of the Securitisation Act, institutions have found a way to get over this hurdle.
Under normal circumstances, banks file a case under DRT for recovery proceedings. The corporate, in turn, rushes to BIFR to stall the move.
The banks can use the provisions of the Sarfaesi Act to take over properties of the defaulting companies. For this, they require the consent of 75 per cent of the secured creditors are needed.
Banks are also approaching the BIFR to get the company out of its ambit. Once the matter comes out of BIFR, banks can accelerate the process in DRTs.
According to senior bankers DRTs normally take around six to eight months to sell the property. As the charges are pari-passu among the lenders, all the banks and institutions are benefited in the process.
