Debt Recovery Tribunals (DRTs) are specialized quasi-judicial bodies in India established to facilitate debt recovery involving banks and financial institutions through a specialized adjudication mechanism.
Genesis of DRTs
- Set up after 1993 passage of Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act
- Need was felt to tackle rising Non Performing Assets (NPAs) issues plaguing banks
- Enable faster settlement rather than prolonged civil court litigation
Organizational Structure
Nationwide structure consisting of:
- 39 DRTs across states and union territories presided over by Presiding Officers
- 5 Debt Recovery Appellate Tribunals headed by Chairperson to hear appeals
- Registrar appointed to handle administration along with Recovery Officers
Scope and Functions
Key roles played by DRTs:
- Expeditious adjudication of cases referred by banks regarding bad loan recovery
- Order disposal of assets and properties to realize NPAs
- Pass final judgement within 6 months once case if taken up with 180 days outer limit
- Powers to attach and sell secured assets of defaulting borrower firms
- Cases beyond jurisdiction of Rs 10 lakh transferred to DRTs from civil courts
Important Provisions
Some salient regulations under RDDBFI Act:
- Prevents borrowers from transferring, selling assets without permission once case filed
- Gives protection to officials enforcing DRT rulings from prosecution
- Borrower firms mandated to declare details of ‘unencumbered assets’
- Appeals only on point of law post ruling instead of on merits and facts
Key Amendments
Some recent key amendments to streamline DRT framework:
- 2021 amendment raising upper jurisdiction limit from Rs 10 lakh to Rs 20 lakh
- 2022 change allowing Public Sector Undertakings (PSUs) like GAIL to directly approach DRT
- 2023 amendment for establishment of additional tribunals and revision in qualifications of officers
- Proposals to expand approach to include entities beyond banks like Asset Restructuring Companies
Performance on Recovery
DRTs facilitated recovery of significant amount of bad debts:
| Key Metric | Figure* |
| Cases Received Till Date | Over 2,90,000 |
| Disposal Rate | 70% |
| Loan Amount Involved | Rs 5 lakh crores+ |
| Amount Recovered Till Date | Over Rs 1.5 lakh crores |
Cases Admission Updates
- As of December 2022, over 72,000 cases involving Rs 3 lakh crore were pending with DRTs highlighting high volume.
Recent Incidents
- A December 2022 CAG report revealed 1,700 cases involving Rs 7,900 crore saw timebarring/ dismissal due to delays in admission/ hearing by Mumbai DRT resulting in no recovery.
Additional Steps Taken
- An e-DRT portal is being developed by Indian Banks’ Association for online filing of recovery applications and case tracking helping transparency.
- The government has approved setting up of additional DRT Benches in 5 states along with notifications on qualifications and appointments of recovery officers.
Legislative Development
- The Parliament passed the Insolvency & Bankruptcy Code (Amendment) Bill 2022 in July 2022.
Implications
- It empowers DRTs to also exercise jurisdiction under IBC for corporate insolvency cases boosting their ambit.
- It enables creditors initiate insolvency resolution process against personal guarantors of corporate debtors in default under DRT.
The Future DRTs continue to evolve into comprehensive financial recovery courts once envisaged under the Vishwanathan Committee Vision 2020 document. Enhanced digitization, infrastructure, qualified workforce and legal framework would power them effectively tackle burgeoning NPA issues plaguing lenders.
