The Hindu Business Line : Panel moots fast track courts for loan default disputes

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Panel moots fast track courts for loan default disputes

IBA offers to train, certify recovery agents

Paul Noronha

Key challenge: Dr. Anil K. Khandelwal (right), Deputy Chairman, Indian Banks’ Association, and Mr H. N. Sinor, Chief Executive, IBA, at a press conference in Mumbai on Thursday.–

Shobha Kannan
Radhika Menon

Mumbai, Nov. 22 Banks may have access to a new means of loan recovery if the recommendations of a working group appointed by the Indian Banks’ Association are accepted by the Reserve Bank of India and the Government.

The IBA’s suggestions include setting up of fast track courts on the lines of a ‘Lok Adalat’ to facilitate the speedy recovery of loans and repossession of property within the existing legal framework.

“What is missing in our country is the presence of some special courts, which can deal with such cases expeditiously. There is a need to create such infrastructure so that there is some legal recourse for such problems,” said Mr H. N. Sinor, Chief Executive, Indian Banks’ Association.

The working group will submit its recommendations in the next 15 days, he added.

In recent times, banks have been in the spotlight for the alleged mistreatment of customers by their recovery agents. According to Mr Sinor, there may not be more than 100 cases in all where recovery agents resort to such coercive tactics. But it remains a key challenge for banks. Both banks and customers need to have legal options before them. A senior official at a private sector bank said that having such fast track courts would inculcate financial discipline among borrowers and lending institutions.

Countries such as the UK and the US have special fast track courts, which deal with cases pertaining to recovery and repossession.

The US requires collection agents to undergo training and receive registration, and certification from authorised associations to carry out their job.

The IBA working group will also suggest a similar model in India. The IBA has offered to take on the responsibility of training and certifying recovery agents.