Banks to assist debt recovery tribunals

Public sector banks are busy deputing manpower to under-staffed debt recovery tribunals (DRTs), after the finance ministry asked them to temporarily fill positions vacant since a few months. According to bankers, Rs 2 lakh crore of loans are stuck in DRTs, which were once established to provide banks with speedy resolution and recovery of disputed loans.

There are 33 DRTs and five debt recovery appellate tribunals in India. Currently, seven DRTs, including one of the three in Mumbai, are functioning without a presiding officer. There are vacancies for recovery officers and assistant staff as well.

“We are in a process of deputing officers with legal background till the government completes fresh recruitment,” said a senior official of a public sector bank.
 

DRTS: NUTS & BOLTS

• There are 33 DRTs and 5 debt recovery appellate tribunals in India
• Banks approach DRTs for disputed loans above Rs 10 lakh
• DRTs are expected to resolve the cases within 6 months
• Bankers say, Rs 2 lakh crore of loans are stuck in DRTs
• Of the Rs 2 lakh crore of suits filed, Rs 1.29 lakh-crore loan recovery certificates are yet to be issued

The finance ministry had called for a meeting with government-owned banks, after they failed to promptly respond to the directive given at the State Level Bankers Committee a month before, after which the bankers assured the postings would be made without further delay. The meeting was chaired by Financial Services Secretary D K Mittal.

Banks approach DRTs for disputed loans above Rs 10 lakh and for loans for which agricultural land was the underlying security. DRTs are expected to resolve the cases within six months. However, it takes much longer for them, given the insufficient staff and the rising number of cases.

Bankers who attended the meeting said of the Rs 2 lakh crore of suits filed in DRTs, recovery certificates are yet to be issued for loans worth Rs 1.29 lakh crore.

Lenders are banking heavily on recoveries, since the need for higher provisioning against rising non-performing assets is eating into their profits. Most public sector banks have reported lower net profits in the second quarter of the current financial year.

“We will dedicate this quarter to recoveries and cleaning up the balance sheet,” said M V Tanksale, chairman and managing director, Central Bank of India. The bank recorded a decline of 35 per cent in net profit, owing to high provisioning in the second quarter of the current financial year. Allahabad Bank, which announced its quarterly results today, said it had targeted Rs 1,000 crore of recovery for the current financial year.

“We have started a recovery drive and have collected around Rs 450 crore of dues in the first half of the current financial year,” said J P Dua, chairman and managing director, Allahabad Bank.