Bankers body prods finmin to improve debt recovery system

Written by Arun S | New Delhi | Updated: Jan 20 2014, 21:09pm hrs
In the backdrop of around 39,000 pending cases involving over Rs 1.6 lakh crore in debt recovery tribunals, the Indian Banks' Association (IBA), the apex body for bankers, will soon submit a report to the finance ministry to improve the functioning of these quasi-judicial bodies.

The suggestions would include setting up of additional DRTs and debt recovery appellate tribunals to reduce the workload of existing ones, appointment of more officers, re-adjusting jurisdictions of existing DRTs so that cases are evenly distributed and a thrust on expeditious implementation of the 'e-DRT Project' to automate and improve services by building IT systems, official sources told FE.

The finance ministry recently wrote to the presiding officers of DRTs regarding its concern over rising pendency of cases in DRTs and asked them to ensure that each case is disposed of within 180 days from the date of its filing as envisaged in the Recovery of Debt Due to Banks and Financial Institutions Act, 1993 under which DRTs and DRATs are set up, ministry sources said.

The ministry noted that in many cases, delays have been due to adjournments, which in turn led to the tribunals not being able to stick to the 180-day deadline for each case.

The increasing pendency has been troubling banks and financial institutions as well as asset reconstruction companies that are considering buying out these assets. The ministry is worried that despite initiatives like calling for regular meetings between banks and DRTs to resolve the cases, there has been no substantial fall in pendency.

Though the number of cases pending with 33 DRTs across the country decreased marginally from around 43,000 at the end of FY13 to around 39,000 by the September-end 2013, the amount involved in those cases increased from Rs 1.43 lakh crore at FY13-end to Rs 1.6 lakh crore by September-end 2013, the sources said. One of the reasons could be the increase in filing of fresh cases being filed in the DRTs, involving higher amounts, they said.

The number of original applications (cases filed by banks and financial institutions to recover their debt) pending in the DRTs had risen 21.6% from 35,221 at the end of 2011-12 to 42,819 as on March 31, while the amount involved in the cases rose 30% from R1.1 lakh crore to R1.43 lakh crore.

In January last year, the Supreme Court in a judgment called for implementation of proposals such as improving the premises and physical infrastructure of DRTs and DRATs, increasing the number of such tribunals, appointing well-qualified recovery officers and senior officers as well as holding regular training programmes for the DRT officers to reduce the pendency of cases.

Finance ministry data showed that the non-performing assets (NPA) of public sector banks jumped by 28.5% from R1.83 lakh crore in March to R 2.36 lakh crore in September. According to an Assocham study, gross NPAs are likely to touch 5% of total loans by coming March.