Bankers have always maintained that although debt-recovery tribunals (DRTs) have resolved many disputes, the process is too long-winded. In an interview with Shayan Ghosh and Aparna Iyer, State Bank of India’s deputy managing director (stressed assets management) PK Malhotra says DRTs should not give borrowers leeway on flimsy grounds. Excerpts:
How effective have the debt-recovery tribunals been in resolving cases?
The DRTs have been effective, but, today, we find that they are saddled with too many cases. Moreover, in some cases, they have, to my mind, given too much leeway to borrowers. Borrowers come with very flimsy grounds and the tribunals entertain them, delaying things. So, DRTs have not delivered to the extent that the financial system had expected them to. But all said and done, it is still a faster method of resolution.
What are the problems in taking cases to the DRT?
Even though our court procedures are very slow, at no point of time do we slacken our efforts. We try to appeal to the good sense of the judges and presiding officers, pointing out that it is public money and requesting that they pass the decree quickly and not give any further dates and adjournments to the other party and let them go off the hook.
But my plea to the judicial fraternity is that they must see this game of some of the borrowers who are not really honest and have duped the system. Then, they start playing the judicial system by taking more and more dates and getting adjournments on flimsy grounds. The judicial system must understand that, ultimately, it is affecting the common man. If I lose money in bad loans, then my ability to fund more business in future goes down along with my ability to bring down interest rates. If my NPA level is high and my resolution level is low, then my ability to fund the next entrepreneurs will be affected. All of this happens because of those few entrepreneurs we take to court have the means and also the ways to play the system.
In case of forensic audits, do you outsource the job to audit firms or is there an in-house team?
We definitely take the help of forensic audit firms but, in many cases, find we do not need outside help as our employees know the account very well. These employees have been in the banking industry for 10-15 years and they understand the nuances of finance. Moreover, with some additional input on skills they can do the job themselves. Our employees are also capable of doing a preliminary investigation to decide whether a forensic audit is required or not.
While declaring a borrower wilful defaulter, is there knowledge-sharing among the banks in the consortium?
Every bank is required to declare the borrower wilful defaulter individually after looking at the money trail. In the Kingfisher Airlines case, one bank has declared it wilful defaulter and another bank has tried to do so. However, State Bank of India (SBI) is in the process of declaring it a wilful defaulter and we are learning from whatever has happened so that our case is fool-proof.
With regard to information-sharing, if my employees tell me that I require additional information on the accounts, I will go to another bank in the consortium or even outside it and ask for information. Wilful defaulter hearings are quasi-judicial and are presided over by one of our managing directors and can’t be done unless we have evidence of wrongdoing.