Banks unhappy with Debt Recovery Tribunal

Source :The Hindu :THIRUVANANTHAPURAM:Monday, Dec 27, 2010


 The commercial banks in the State are aggrieved by the failure of the Debt Recovery Tribunal (DRT) in Kochi to pass orders on cases relating to recovery of debts from borrowers within a reasonable time.

This issue figured at the quarterly review meeting of the State Level Bankers' Committee (SLBC) held here earlier this month.

The SLBC noted that Debt Recovery Tribunals were constituted with the intention of recovering public money from borrowers within the time specified in the Recovery of Debts due to Banks and Financial Institutions Act, 1993. The Act specifies that the tribunals should dispose of applications within six months from the date of submission.

The tribunals are also expected to pass orders within 60 days on securitisation applications filed by the banks under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002.

However, matters are being dragged on for a long time against the spirit and intention of the Acts by the DRT in Kochi, causing hardships to the banks.

Federal Bank informed the SLBC that even uncontested issues were getting unnecessarily delayed.

The bank further informed the SLBC that it had 181 original applications pending before the DRT involving an amount of Rs.122.07 crore.

More than half the number of these cases had been pending orders for more than three years.

As many as 130 securitisation applications had been pending with the DRT since 2006, involving an amount of Rs.124 crore.

The DRT was giving long adjournments in many matters even when the counsels of the banks were present and ready for hearing.

The DRT was also granting stay orders on recovery applications without hearing the banks.

“A significant portion of the bank's funds is blocked in unproductive assets, the value of which deteriorates with the passage of time due to the pendency of litigation,” Federal Bank informed the SLBC.

Other public sector banks and private scheduled banks also are facing the same problem with the DRT, according to the Federal Bank. It said that a perusal of trial cases pending before the DRT for the last three years would give an idea about gravity of the problem.

The SLBC decided to gather feedback on this issue from the other banks for taking it up with the Finance Ministry and the Reserve Bank of India.