Government doubles monetary limit for filing cases in DRT
Union Finance Ministry has doubled pecuniary limit to Rs. 20 lakh from Rs.10 lakh for filing loan recovery application in Debt Recovery Tribunals (DRT) by banks and financial institutions. It means that bank or financial institution or consortium of banks or financial institutions cannot approach DRTs if pecuniary limit amount due is less than Rs 20 lakh. This move is aimed at helping reduce pendency of cases in DRTs.
Banks and financial institutions’ recovery of dues (loans) takes place on ongoing basis through legal mechanisms, which inter-alia includes Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002; Recovery of Debts to Banks and Financial Institution (DRT) Act, 1993 and Lok Adalats. The borrowers of such loans continue to be liable for repayment even when the loans have been removed from the balance sheet of the bank(s) concerned. To make recovery tribunals more effective and to facilitate fast disposal of debt recovery cases, government has made several amendments in different laws, including SARFAESI Act.
Debt Recovery Tribunals (DRT)
DRTs were first set up under Recovery of Debts Due to Banks and Financial Institutions Act 1993, also known as DRT Act. Under it, DRTs were established to facilitate debt recovery involving banks and other financial institutions with their customers. Under existing norms, DRT is supposed to dispose of matter referred to it within 180 days of receipt of application and appeal can be filed against DRT order with Debt Recovery Appellate Tribunals (DRATs). There are 39 DRTs and 5 DRATs functioning at various parts of the country.