Even as bankers rely on debt recovery tribunals (DRTs) as a legal alternative to recover bad loans, they feel the process is too long and not very effective, reports fe Bureau from Mumbai. According to RBI data, cases of loans of over Rs 2 lakh crore were pending at 33 tribunals till FY14 end, up from Rs 1.43 lakh crore in FY13.
IDBI Bank executive director RK Bansal says DRTs are burdened with cases and, thus, their effectiveness is lower than expected. He said even if a case is resolved, the DRT issues recovery certificates which takes nearly a year to locate the borrower’s assets and find a borrower. “It takes a year from the date of resolution for the bank to recover the dues,” Bansal added.
RBI governor Raghuram Rajan had recently said the amount recovered from cases decided in 2013-14 was Rs 30,590 crore, while the value of loans to be recovered was Rs 2.36 lakh crore. Thus, only 13% of the outstanding NPAs in the tribunals were recovered in FY14. According to Rajan, even though the law says that cases before the DRT should be disposed off within 6 months, only about a-fourth of the cases pending at the start of the year are disposed off during the year — suggesting a four-year wait even if the tribunals focus only on old cases.
Bankers also say that the tribunals have also been giving too much leeway to borrowers who seek regular adjournments. SBI deputy managing director (stressed assets management) PK Malhotra told FE last month that apart from the DRTs being saddled with too many cases, borrowers start playing the judicial system by seeking more and more dates. “So DRTs have not delivered to the extent that the financial system had expected them to deliver,” Malhotra had said.
