Debt recovery tribunals (DRTs) are judicial forums that deal with cases related to recovery of debts by banks and financial institutions. They are governed by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDB Act) and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). There are 39 DRTs and 5 Debt Recovery Appellate Tribunals (DRATs) in India. According to the latest data available, as on February 28, 2022, there were 1,62,272 cases pending in DRTs involving an amount of Rs 4,79,542 crore. The pendency of cases in DRTs has been a matter of concern for banks and financial institutions as it affects their asset quality and profitability.

Performance Review of Empanelled Advocates

In a bid to enhance the efficacy and efficiency of DRTs, the Department of Financial Services under the Ministry of Finance held a conference of Chairpersons of DRATs and Presiding Officers of DRTs on February 17, 2024. The conference was attended by senior officers from public and private sector banks, the Indian Bank Association (IBA), and the Insolvency and Bankruptcy Board of India (IBBI).

One of the key decisions taken at the conference was that banks will conduct periodical review of the performance of empanelled advocates at DRTs and rationalise the cases assigned to them based on their performance. This is expected to improve the quality of legal representation and advocacy by banks and financial institutions before DRTs and DRATs. The performance review will be based on various parameters such as success rate, disposal rate, attendance rate, quality of pleadings, etc. The rationalisation of cases will ensure that each advocate handles a reasonable number of cases depending on their capacity and expertise.

Other Measures to Fast-Track DRTs Cases

The conference also discussed several other measures to fast-track DRTs cases, such as:

• DRTs and DRATs will take all possible steps to reduce pendency at various stages through strict monitoring. They will adopt best practices such as case management system, e-filing, e-notice, e-payment, video conferencing, etc. They will also expedite disposal of old cases and dispose of cases within the prescribed time limit.
• Several suggestions regarding changes and amendments in DRT Regulations, SARFAESI Act and RDB Act were discussed to make the process of recovery more efficient. Some of the suggestions were to increase the pecuniary jurisdiction of DRTs, to empower DRATs to transfer cases from one DRT to another for speedy disposal, to provide for summary procedure for disposal of certain cases, to streamline the procedure for attachment and sale of properties, etc.
• Banks and financial institutions will reconcile cases that are pending in DRTs and DRATs but have already been settled. They will update the status of such cases in the Management Information System (MIS) of DRTs and submit periodic reports to DRTs and DRATs. They will also ensure that no appeal is filed against settled cases.
• Banks will ensure presence of their officers at all the hearings of their respective cases before judicial forums. They will also ensure that their officers are well prepared with facts and documents pertaining to their cases. They will also appoint nodal officers for coordination with DRTs and DRATs.
• Stakeholders will leverage the under development e-Auction platform for listing and auction of properties of banks and financial institutions under the provisions of various Acts- SARFAESI Act, 2002, RDB Act, 1993 and IBC, 2016. The e-Auction platform will provide a transparent and efficient mechanism for sale of properties through online bidding. It will also facilitate wider participation of bidders and better price discovery.

Conclusion

The conference was a positive step towards addressing the challenges faced by DRTs and DRATs in expeditious debt recovery. By conducting performance review of empanelled advocates and rationalising the cases assigned to them, banks will be able to speed up the resolution of their bad loans and improve their asset quality. The other measures discussed at the conference will also help in streamlining the process of recovery and enhancing the transparency and accountability of DRTs and DRATs.

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