RBI asks debt tribunals to speed up disposal of cases in order to reduce delays

MUMBAI: Reserve Bank of India deputy governor R Gandhi pleaded with debt recovery tribunal heads to pull up their socks in disposing off cases so that the sanctity of contracts is upheld which otherwise is getting eroded in meaningless delays.

“I do hope that DRTs and DRATs would put their best foot forward in creating an environment where a healthy, vibrant and sound financial system can be built and sustained,” said Gandhi at a recent workshop for judges of DRATs (debt recovery appellate tribunals) and presiding officers of DRTs (debt recovery tribunals). “The Sarfaesi Act was enacted to avoid going to DRTs but banks get dragged to DRTs on flimsy grounds.

The central bank and lenders are pushing for a better understanding of disputes between them and borrowers by the debt recovery tribunals.

The poor disposal of cases and entertaining of suits even if they are flimsy is crippling the banking sector. A new bankruptcy law is in the offing given that banks are collapsing under the weight of bad loans.

The total number of cases filed in DRTs by banks as a whole up to March 2014 was 1.50 lakh involving.`2.6 lakh crore. But the total amount recovered up to March was .`42,700 crore, just 16.43% of the total amount involved.