Home >Politics >Policy >Plan to computerize debt recovery tribunals put on hold
Implementation of electronic governance in debt recovery tribunals would have helped banks, defendants and recovery officers by automating all processes and procedures. Photo: iStock (iStock)
Implementation of electronic governance in debt recovery tribunals would have helped banks, defendants and recovery officers by automating all processes and procedures. Photo: iStock
(iStock)

Plan to computerize debt recovery tribunals put on hold

The finance ministry is reconsidering the move, given the high cost of computerizing these tribunals

New Delhi/Mumbai: The government has put on hold its plans of fully computerizing debt recovery tribunals (DRTs), a move that may further delay the overhauling of these tribunals saddled with long delays and pending cases.

Given the high cost of computerizing these tribunals, the finance ministry is reconsidering the move, two people familiar with the development said, requesting anonymity.

As on March, there were 40,866 cases pending in the tribunals involving an outstanding amount of 1.41 trillion.

Implementation of electronic governance in DRTs would have helped banks, defendants and recovery officers by automating all processes and procedures and expediting the recovery process of public money, the government had said in an answer to a question in Parliament in March.

It would have ensured applicants and defendants got hassle-free access to information, made it easier for banks and financial institutions to track case-related information and helped recovery officers enforce orders. DRTs would also be able to efficiently manage case records and improve the efficiency of their services through this computerization.

“The approximate cost of this plan is around 200 crore. The question being discussed is whether this will solve the problems plaguing the DRTs," said one of the people mentioned above.

“DRT should look at appointing judges first before taking up computerization, etc. In key areas, there are no judges in DRT. They are also understaffed and frequently banks send their legal officers on deputation to DRT," said the chairman of a state-run bank. “Yes, with computerization, things should have improved provided there were judges to pass a speedy judgement."

Banks can take recourse to DRTs to recover any asset of a borrower, irrespective of whether they are pledged with the bank or not. This is in contrast to recovery under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, where only assets that are mortgaged with the banks can be recovered.

The situation has improved over the last year, said another senior official with another state-run bank. “The staff is being recruited and the situation is much better than before. However, it will take a long time for reducing the number of pending cases," he said. But because of the long time taken by DRTs, partly due to the delaying tactics used by lawyers of the borrowers, banks prefer the Sarfaesi route, he said. Also, when DRT rules in favour of the banks, it can be challenged with the appellate tribunal in DRT and then at the Supreme Court, which makes it a long process, he added.

The number of pending cases at the end of 2012 was 41,205 involving 1.30 trillion, compared with 54,061 cases involving 1.46 trillion at the end of 2011.

To improve the functioning of DRTs, the government enacted the Enforcement of Security Interest and Recovery of Debt Laws (Amendment) 2012. Under this, a defendant will have to file a written statement in a case within 30 days. The number of adjournment per case was also restricted to three per defendant. DRTs have also been empowered to pass an order acknowledging the settlement reached between banks and borrowers.

Ajay Gautam, an advocate who handles cases in DRTs, said presiding officers take a long time in giving stay orders for applications.

“When we approach the tribunal for getting a stay order for an auction by the bank, the presiding officer does not decide the case in a day or two. Sometimes a stay order is given after the bank auctions the property," Gautam said. “Because of this, the bank even adds the cost involved in auctioning, like advertisements in newspapers, to the client’s account."

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