The government has doubled the pecuniary limit to Rs 20 lakh for filing applications in the debt recovery tribunals (DRTs) to declutter them and help them focus on high-value matter. Financial services secretary Rajiv Kumar said the higher limit will free up DRTs, leading to quicker recovery from defaulters. The government amended the rules of Recovery of Debts due to Banks and Financial Institutions Act, 1993, last week and raised the limit from Rs 10 lakh earlier. This was part of the finance ministry’s move to make the debt recovery process more efficient.
As many as 38,376 cases between Rs 10 lakh and Rs 20 lakh are pending in various DRTs. These made up for 38% of the number of cases as of June but, in value terms, they accounted for just 4%. The latest data suggest the number of the cases within this bracket have touched 41% of all cases now. “Data indicates that 80-85% of non-performing assets (NPAs) cases in the range of `10-20 lakh are fully secured. For their recovery, lenders can take action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act),” Kumar said.
The Union finance ministry has also asked all states to monitor that the district magistrates pass order within 60 days for handing over physical possession of pledged collateral of defaulting borrowers to the lenders. As many as 10,000 cases with outstanding loan of Rs 40,000 crore are pending before district administration.
The finance ministry has also decided to set up e-auction bazaar of properties of defaulters, Kumar added. It will be a common platform for the public sector banks which will enable them to put all e-auction properties on the website with details including reserve price. It will lead to greater transparency and ease in the auction process, and larger number of people will be able to
participate. This will help lenders realise better value for such properties, Kumar said.
The secretary also said computerising records of cases being handled across all the 39 DRTs and five Debt Recovery Appellate Tribunals (DRATs) has also started. Banks and financial institutions’ recovery of dues takes place on ongoing basis through legal mechanisms, which include SARFAESI Act, Recovery of Debts to Banks and Financial Institution (DRT) Act and Lok Adalats.