Banks seek changes in law for better loan recovery

To improve the loan recovery performance of banks in Odisha, the state level bankers' committee (SLBC) has urged the state finance department to adopt the procedures of other states to bring down the mounting pending cases.

The banks are of the opinion that the recovery procedures under the Odisha Public Demand Act should be amended in tune with similar acts in Uttar Pradesh, Madhya Pradesh, Rajasthan and other states to improve the recovery performance under different government sponsored schemes.

They also oppose the mandate issued by the state revenue and disaster management department in 2007, which asks the banks to pay 50 per cent court fee upfront at the time of filing cases under OPDA, while the balance amount is to be adjusted from the certificate debtor and deposited with the government. "No court fee is to be paid initially at the time of filing of case. Hundred per cent court fees should be adjusted from the amount recovered from the certificate debtor and deposited with the government so that there will be no revenue loss to the state exchequer", said SLBC quoting the opinions of its member banks at various meetings.

SLBC said, in the referred states, the certificate officer (the district collector), on receiving the certificate, proceeds to recover the amount together with the cost of recovery, a certain percentage of the amount stated in the certificate. The cost of recovery includes the litigation cost, court fees, commission of officials involved in the recovery process and adjusted from the amount recovered from the certificate debtor.

Similarly, the provision of commission to the officials engaged in recovery process encourages them in yielding better results.

"In Odisha huge numbers of OPDR (Odisha Public Demand Recovery) cases are pending with the certificate officer for disposal in different districts. We are sure that if the recovery mechanism of the named states is followed in Odisha, banks will be benefitted", SLBC wrote to UN Behera, additional chief secretary (finance). Under the Odisha Public Demands Recovery Act, 12,365 cases involving recovery of Rs 157.56 crore are pending for disposal (as on June 30, 2014). While 1,694 cases are pending for one year, there are 4,369 cases which are waiting for settlement for 1 to 3 years. Similarly, 6,032 cases are pending for more than three years.