The Centre has directed state-owned lenders to avoid seeking unnecessary adjournments before debt recovery tribunals, a government official said.
Banks have been asked to conduct monthly reviews to expedite the debt recovery process and reconcile cases that have already been settled.
“An observation was made by Presiding Officers (POs) of debt recovery tribunals (DRTs) that the legal representative from banks often seeks adjournments on minor issues, which often leads to delays in resolution of cases,” the official said, adding lenders have been told to ensure that they should advise their legal teams to keep a tab and conduct reviews on unnecessary adjournments.
As per latest data from the finance ministry, around 215,000 cases are pending before DRTs till January 2024, of which 162,000 are original applications (OAs) filed under Section 19 of Recovery of Debts and Bankruptcy Act (RDB Act), 1993. RBI data showed in FY23, around 58,000 cases with amounts totalling about ₹4.02 lakh crore were referred to DRTs.
“While some pendency is on account of the legal remedies being pursued by litigants, like going to higher courts, it was pointed out that lack of an aggressive approach from bank legal representatives also led to inordinate delays,” said the official cited above.
The government has also set up a panel to suggest amendments to SARFAESI and DRT Acts, including adding a provision for granting legal sanctity to e-notices to debtors to fast-track the recovery process.
“The report will be tabled soon, and necessary amendments will be pursued after the new government takes over,” the official said.
Earlier this year, the finance ministry, after a review meeting to enhance efficacy of DRTs, directed banks to conduct periodic reviews of the performance of empanelled advocates and rationalise assignment of their cases, considering their performance. Banks were further directed to ensure the presence of their officers at all case hearings before judicial forums.
This February, minister of state for finance Bhagwat Karad observed that pendency is also sometimes caused by the absence of lawyers, either on one side or both sides, or by requesting adjournments.
