New Delhi: Banks have reached out to the government, making a case for more frequent Lok Adalats to be held through Debt Recovery Tribunals, or DRTs, to settle distressed loans out of court.
A representation was made by a few public sector banks (PSBs) last month on the matter, two executives aware of the matter told ET. “These recommendations are part of the discussions with the government to step up on loan recovery and ensure expeditious resolutions,” one of them said. Under existing laws, banks can take cases where the loan outstanding does not exceed ₹20 lakh to the Lok Adalat forum to try to settle it amicably with the borrower.
In FY23, around 14.2 million cases involving ₹1.88 lakh crore were referred to Lok Adalats, and banks recovered around ₹3,831 crore. “If the government can push state-level authorities to organise more Lok Adalat camps, some of these cases where borrowers are also willing can be disposed of quickly,” said the second bank official cited above. At present, National Lok Adalats are held on a single day in all the courts of the country, four times a year. Recently, the SC held a special Lok Adalat from July 29 to August 3. State Lok Adalats are organised by state legal services authorities as per the local conditions and needs.
