Debt tribunals de-cluttered to focus on high value NPAs

The Finance Ministry on Tuesday doubled the minimum threshold for filing cases in debt recovery tribunals (DRT) to Rs 20 lakh to de-clutter DRTs so that they can focus on quick recovery of high value non-performing assets (NPAs).

It also advised public sector banks (PSBs) to develop an e-auction portal in collaboration with the Indian Banks' Association (IBA) and upload details of properties of all defaulters on the common platform to have an enlarged bidder base.

"The Department of Financial Services has adopted a targeted approach to make debt recovery laws and processes more effective so as to increase recovery of public money from defaulting borrowers," Finance Services Secretary Rajeev Kumar told reporters.

He said the government is expecting good recovery in the second quarter.

As per the government data, there were 38,376 cases with a default amount between Rs 10 lakh and Rs 20 lakh pending in DRTs till June 30. This accounted for 38 per cent of the total pending cases but amounted to only four per cent of the total value, he said.

The share of cases in the range of Rs 10 lakh to Rs 20 lakh filed with the DRTs in recent months increased to 41 per cent.

"Data indicates that 80-85 per cent of NPA cases in the range of Rs 10 lakh to Rs 20 lakh are fully secured. For their recovery, lenders can take action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act," Kumar said.

The secretary added that while auctioning of properties is a core activity of banks to ensure recoveries, in the absence of modern techniques, positive results from property auctions were limited and potential buyers were not fully informed of all details.

"Now PSBs have been advised to get together with the IBA steering an initiative to redesign the PSB e-auction websites. Details of auctionable properties across banks have been standardized and a common platform is on the anvil," he said.

The government has asked state governments to monitor and ensure that orders are passed by the respective district administrations within the stipulated 60 days time limit and extend help to banks and financial institutions to get possession of secured property of defaulting borrowers.

"Over 10,000 applications from PSBs are pending (at the districts)... District Magistrates are required to pass orders on secured asset seizure within 60 days by banks for their further disposal," he said.

Kumar said the government has started computerizing the records of cases across all 39 DRTs and five Debt Recovery Appellate Tribunals. Similar to the e-court software, the e-DRT will enable banks and asset reconstruction companies (ARC) to e-file cases and access all relevant records.

--IANS

vv-mgu/agm/sed