Banks want higher limit NPA cases under Lok Adalat ambit

Currently, Lok Adalats ""organised by civil courts to effect a compromise between disputing parties in matters pending before any court"" can handle cases up to a ceiling of Rs 20 lakh. Banks want to increase the limit to Rs 50 lakh.

"We find Lok Adalats as a very effective system to recover dues from borrowers. It has been particularly successful in Delhi and states such as Bihar among other states," said a general manager from Punjab National Bank.

In August 2004, the Reserve Bank of India upped the monetary ceiling of cases for compromise settlements referred to the Lok Adalats organised by civil courts to Rs 20 lakh from the earlier limit of Rs 5 lakh.

After Debt Recovery Tribunals were empowered to organise Lok Adalats to decide on cases of NPAs, public sector banks recovered as much as Rs 40.38 crore as on September 2001. The progress through this channel is expected to pick up in coming years, say bankers.

Earlier the role of Lok Adalats was confined to road accidents, matrimonial cases, and compoundable criminal and land acquisition cases until it was broadened to include debt recovery cases and listed cases.

There is also a proposal to bring cases pending in High Courts under Lok Adalats to speed up the legal system.

A Lok Adalat can not only take up cases which are pending before courts but also pre-litigative stage, that is, disputes which have not yet been referred to a court of law. Matters can be either civil or criminal in nature.