FinMin urges PSBs to settle small debt defaults by taking haircuts

Says this would enable in reduction of pending cases at DRTs and enhance recovery for banks

To reduce the burden on debt recovery tribunals (DRTs), the finance ministry has asked public sector banks (PSBs) to go for one time settlement (OTS) of loan default cases ranging between Rs 20 lakh and Rs one crore, with the mutual consent of borrowers.

“The move will enable the reduction of cases as they constitute about 72-74 per cent of the pending cases at DRTs and also expedite the recovery of non-performing Assets (NPAs) by the banks. In these settlement cases, the board of the concerned banks decides on the haircut and there is no average haircut for the banks,”