Functioning Of Debt Tribunals Is Unsatisfactory, Bankers Tell Rs

Bankers have indicated to the Rajya Sabha committee that the debt recovery tribunals were not functioning satisfactorily due to which recoveries are turning out to be a problem.One of the problems is that the validity of the tribunal itself has been challenged and many of the cases that come out of the tribunal go to the courts.

The Rajya Sabha committee was in Mumbai last week to get a feedback from banks as to how the debt recovery tribunals were working. The purpose of the meeting was to see if any subordinate legislations are required for the present legislation.

Bankers have pointed out that the area of coverage of the debt recovery tribunal extends over states and this creates a territorial problem in executing orders. If the order has to be challenged, it is not clear which court to appeal to. This is so as courts are under the territorial jurisdiction of the state. Hence, if the company against whom the case is filed is in a overlapping region, the court of appeal turns out to be a problem.

 

Another problem was that of receivers. Even if the case is decided in favour of the banks and they are allowed to take charge of the security, there is a tremendous shortage of liquidators to sell the assets and recover the cash for the banks. There are also problems like lack of space for setting up of tribunals, especially in Mumbai. Bankers pointed out that it is very essential to encash the dues of the banks for speedy recovery and liquidation of assets as the market conditions have been changing off late. It is pointed out that by the time the case is settled, the plant and machinery in the security of the banks is rusted and cannot be sold.

Earlier the real estate of the company could be sold and the dues of the bank recovered. Now, with the real estate markets crashing, even that is not possible. Hence it is crucial that the plant and machinery are possessed fast the sold.Bankers pointed out that the banking system has nearly Rs 40,000 crore worth of non performing assets.

Unless recoveries are made, the system as a whole will go sick. Hence the bankers stressed the need for strengthening the debt recover tribunal system.