Bid to improve loan recovery, monitor cases closely

Rising bad loans in the banking system, especially in public sector banks, has prompted the Finance Ministry to take up computerisation of debt recovery tribunals and debt recovery appellate tribunals.

Increasing efficiency of the loan recovery process through computerisation has assumed urgency as bad loans in the banking system jumped 45 per cent to Rs 1,42,300 crore in FY12 from Rs 97,900 in FY11.

Computerisation of the tribunals, as envisaged by the Ministry, will enable online registration of applications, online submission of applications and documents by the registered applicant, online issue of notices, orders and e-auctions.

The system would also provide for hearing of cases through video-conferencing wherever required.

“Once the debt recovery tribunals (DRTs) and debt recovery appellate tribunals (DRATs) are computerised we will be able closely monitor recovery cases from the head office almost on a day-to-day basis.

“This will also ensure that our officers visit the tribunals only at the time when their case is scheduled to come up for hearing (and not wait for their turn from morning till evening), thereby enabling them to pursue other loan recovery cases,” said a senior public sector bank official.

Prescribed application

Under the computerised environment, it will be necessary for banks to incorporate the prescribed application forms in their computer systems to be filed with the DRTs according to the rules framed under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.

However, certain procedures for filing of original documents and affidavit coupled with such original documents may still need to be carried out manually.

The DRTs have been established by the Government of India under an Act of Parliament for expeditious adjudication and recovery of debts due to banks and financial institutions.

The DRTs function under the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and as per the Debts Recovery Tribunal (Procedure) Rules, 1993.

The provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 applies only where the amount of debt due to a bank or a financial institution or to a consortium of banks or financial institutions is not less than Rs 10 lakh.

DRATs have been established to hear and adjudicate on appeals preferred by borrowers against the judicial orders passed by the Presiding Officers of various DRTs.

At present, there are 33 DRTs and five DRATs across the country. In its latest report on trend and progress of banking in India, the Reserve Bank of India attributed the spurt in bad loans to the slowdown prevailing in the domestic economy as well as inadequate appraisal and monitoring of credit proposals.

In FY2012, banks referred 13,365 loan recovery cases (against 12,872 in FY2011) to DRTs involving an aggregate amount of Rs 24,100 crore (Rs 14,100 crore). In the reporting year, banks recovered Rs 4,100 crore as against Rs 3,900 crore in the year ago period.

(This article was published on November 12, 2012)
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