Latest news with #DRTs
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Business Standard
22-07-2025
- Business
- Business Standard
Public sector bank NPAs drop to 2.58% from 9.11% in 4 yrs: Finance ministry
The gross non-performing assets (NPAs) of public sector banks (PSBs) have shown a consistent decline over the past five financial years. According to government data, gross NPAs reduced from 9.11 per cent in March 2021 to 2.58 per cent in March 2025. In a statement issued on Tuesday, the Ministry of Finance said, "Both the government and the Reserve Bank of India (RBI) have introduced several measures to tackle the issue of rising NPAs and improve recovery rates." Listing out the measures, the statement added, "A fundamental shift in credit discipline through the Insolvency and Bankruptcy Code (IBC), which has reshaped the borrower-creditor relationship. This law has stripped defaulting promoters of control over their companies and barred wilful defaulters from participating in the resolution process. Additionally, personal guarantors of corporate debtors are now covered under the IBC." It further said, "Amendments to existing laws such as the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 and the Recovery of Debts and Bankruptcy Act to make them more effective in recovery proceedings." Focus on high-value cases The government also increased the financial limit for cases handled by Debt Recovery Tribunals (DRTs) from ₹10 lakh to ₹20 lakh, as per the finance ministry. This allows DRTs to concentrate on higher-value accounts, thereby improving recovery for banks and financial institutions. Besides, public sector banks have established dedicated verticals and branches for stressed asset management. These specialised units focus on active monitoring and targeted recovery of NPAs. Measures like deploying business correspondents and the "Feet-on-Street" model have further supported this effort. RBI's prudential framework To ensure early detection and resolution of stressed assets, RBI issued a Prudential Framework, which requires timely recognition, reporting, and resolution. It also encourages banks to act swiftly by offering incentives for early implementation of resolution plans. Banks follow strict procedures for property valuation according to RBI guidelines. These include: Having a board-approved policy to ensure valuations are conducted by independent, qualified valuers. Creating a panel of professional valuers with the required credentials and maintaining a register of these valuers. Conducting property valuations before loan sanctions and again before selling assets under SARFAESI. "For properties worth ₹50 crore or more, banks must obtain at least two independent valuation reports. After taking possession of an asset from a defaulting borrower, valuation is done again before disposal," said the statement. RBI also encourages the use of e-auctions for the sale of such properties to attract more bidders and achieve better price discovery.
New Indian Express
22-07-2025
- Business
- New Indian Express
Nine years of IBC: Over Rs 26 trillion stressed debt resolved
MUMBAI: The Insolvency and Bankruptcy Code (IBC), introduced nine years ago in May 2016, has enabled direct resolution of Rs 12 trillion (excluding cases under liquidation) of debt across 1,200 cases of stressed borrowers but when the indirect resolutions are considered, the number tops Rs 26 trillion and another Rs 22 trillion of debt have been resolved through other mechanisms. While the IBC has directly resolved Rs 12 trillion worth of stressed loans, it has also created significant deterrence amongst borrowers leading to the settlement of 30,000 cases with Rs 14 trillion of debt even before insolvency applications were admitted by the various benches of the national company law tribunals (NCLTs), shows and analysis by Cirisil Ratings. When the number of resolutions through the pre-IBC mechanisms like the debt recovery tribunals (DRTs), the lok adalats and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi), the total resolved debt tops Rs 48 trillion since 2016. While the IBC has been periodically amended to further enhance its efficiency, stretched timelines and limited success in implementation for certain sectors may need some more interventions, the report primary changes in debt resolution approach that IBC brought in has been the shift from a debtor-in-control model to a creditor-in-control framework that distinguishes it from other debt resolution mechanisms existing prior to IBC such as the debt recovery tribunals (DRTs), the lok adalats and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi). This has meant that since 2016, of the total resolved debt of Rs 48 trillion across different debt resolution mechanisms, the average recovery rate under the IBC has been the highest at around 35%, versus 22% for Sarfaesi, 7% for DRTs and 3% for lok adalats. Other reasons for the relative success of the IBC over other debt resolution mechanisms include the flexibility accorded to creditors to change the managements of viable assets on a going-concern basis and to right-size debt. These, coupled with the improved economic environment over the past three fiscals, have boosted investor interest, especially in the infrastructure and manufacturing sectors. The IBC has also enabled the resolution of numerous small-to-mid sized (up to Rs 500 crore) distressed assets--while the past three fiscals accounted for 60% of all resolution approvals since the IBC, it represented only 40% of the total debt. According to Mohit Makhija, a senior director with Crisil, one-fourth of total debt resolved since 2016 has been through the IBC, contributing to 50% of total recovery. Aided by its deterrent effect, the IBC will remain the preferred route for debt resolution going ahead as well. Further, small-to mid-sized assets, which form 85% of the IBC's unresolved pipeline, are likely to attract investors with varied risk appetites. That said, the key challenge, according to him that IBC faces, has been the high backlog of cases at the NCLTs, primarily due to procedural delays at various stages and cross-litigation by stakeholders stretching the resolution timelines beyond what was earlier envisaged (713 days as of last fiscal vs the regulatory prescribed 330 days).To address this, the Insolvency and Bankruptcy Board of India (IBBI) has increased the bench strength of NCLTs, allowed routine submissions by resolution professionals online, and enabled part-wise resolution of corporate debt.
Time of India
24-05-2025
- Business
- Time of India
Finance Ministry urges banks, DRTs to speed up debt recovery
Tired of too many ads? Remove Ads The finance ministry has called on banks, debt recovery tribunals and other stakeholders to work together to reduce the backlog of pending cases and create a more effective recovery ecosystem, to help free up capital stuck in capital could be redeployed "for productive use in the economy," the ministry said in a statement on appeal was made during a colloquium held earlier in the day with chairpersons of Debt Recovery Appellate Tribunals (DRATs), presiding officers of debt recovery tribunals (DRTs), and representatives of various public and private sector banks as well as the Indian Banks' the key issues deliberated were prioritisation of high-value cases, use of alternate dispute resolution mechanisms such as Lok Adalats, and further reforms to reduce turnaround time for various processes in DRT proceedings, the statement was also pointed out that robust monitoring and oversight mechanisms by banks are key for increasing recovery through ministry also highlighted key initiatives taken by the Department of Financial Services such as the adoption of revised DRT regulations, mandatory e-filing, hearing through video conferencing, and hybrid hearings for reducing turnaround time of the matters adjudicated by the tribunals.
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Business Standard
24-05-2025
- Business
- Business Standard
Finance Ministry calls for joint effort to cut backlog at debt tribunals
The Finance Ministry on Saturday urged all stakeholders to collaborate in reducing pendency of cases at debt recovery tribunals (DRTs) by establishing an effective recovery ecosystem. This would facilitate the redeployment of capital locked in cases pending before DRTs for productive use in the economy, the finance ministry said in a statement. During a colloquium of Chairpersons of Debt Recovery Appellate Tribunals (DRATs) and Presiding Officers of Debt Recovery Tribunals (DRTs) organised by the Department of Financial Services (DFS), the Ministry of Finance also discussed effective implementation of DRT Regulations, 2024 and prioritisation of high value cases in DRTs for optimal recovery. Justice S V N Bhatti, Judge of the Supreme Court of India, graced the meeting which was also attended by senior officers of the DFS, representatives of various public and private sector banks and Indian Banks' Association. DFS Secretary M Nagaraju highlighted various key initiatives taken by the Department such as adoption of revised DRT Regulations, mandatory e-filing, hearing through video-conferencing, hybrid hearings etc. for reducing turnaround time of the matters adjudicated by the tribunals. During the meeting, introduction of further reforms to reduce turn-around time for various processes in DRT proceedings etc. were also discussed. Robust monitoring and oversight mechanisms by banks for increasing recovery through DRTs and use of alternate dispute resolution mechanisms including Lok Adalats for expeditious disposal of cases were also discussed.
Time of India
14-05-2025
- Time of India
Duo use forged documents, pledge bizman's flat to raise loans worth 2.8 crore from two nationalised banks
1 2 3 Pune: The Kalepadal police are investigating the complaint of a 74-year-old city-based import-export trader, accusing a real estate broker from Katraj and a woman from Jaysingpur in Kolhapur district of forging documents to mortgage his 3BHK flat in Gahunje. As per the plaint, the victim's flat was mortgaged with nationalized banks in Mumbai and Pune to secure loans worth Rs2.82 crore in the FIR registered on May 13, complainant Ashok Nopany, a resident of Undri, also stated that bank officials acted in connivance to sanction loans in the second half of 2022 without verifying the authenticity of the documents furnished by the woman. This is despite the fact that the flat is held jointly in his and his daughter's name and they continue to possess the flat, the complainant broker and the woman he introduced to Nopany as his 'sister from Jaysingpur' created an account in Nopany's name with the Akurdi branch of a cooperative bank and got the loan amounts transferred two banks have now approached the Debt Recovery Tribunals (DRTs) in Mumbai and Pune, seeking possession of the same flat against which they sanctioned Rs1.42 crore and Rs1.40 crore loans, respectively. Documents provided to the DRT in Pune by one of these banks revealed the account opened in Nopany's name with the cooperative his part, Nopany has secured a stay order from a civil court in Wadgaon Maval against the attachment and auction notices issued by the banks in relation to his flat."I have also filed third party intervention pleas with the DRTs. The matters are pending for hearing," Nopany told TOI on officer and assistant inspector of the Kalepadal police, Amit Shete, said, "The suspects named in the FIR are on the run and have switched off their cell phones. Our team will be working on clues to see that they are nabbed soon. For now, a case of criminal breach of trust, cheating, forgery with an intent to use forged documents , forgery of valuable security, use of forged documents as genuine and common intention has been registered as per the provisions of the Bharatiya Nyaya Sanhita (BNS)."Nopany told TOI that in Aug 2022, he was looking for a buyer for his Gahunje flat as he was to raise money for his business. He met the Katraj real estate broker through other real estate agents. The broker evinced interest in buying Nopany's Gahunje flat. After a couple of meetings at his Undri residence, a deal was struck to sell the flat for Rs1.95 to signing an agreement for sale, the broker convinced Nopany to execute the sale agreement with his sister from Jaysingpur to secure a loan at a faster pace. A sale agreement was signed and registered with the Wadgaon Maval sub registrar's office against the payment of a Rs20,000 token to Nopany, with a promise to clear the remainder as soon as the loan is the next few months, when Nopany did not get the promised money, he started asking the broker to cancel the sale agreement. However, the latter kept insisting on waiting further to get the said, "In March 2024, representatives of one of the banks reached the Gahunje society to paste an auction notice in the woman's name on my flat. I checked with them, and they told me that the woman had defaulted on repayment of Rs1.42 crore loan against the flat mortgaged with the bank. I wondered how this could be possible and got a lawyer to secure a search report and a title report. I realised that the woman used a photocopy of the property documents I had given to the broker to create forged documents to mortgage the flat. She later transferred the sale agreement in favour of the broker."He added, "Just when I was sorting out this issue with one bank, officials from the other bank's Shivajinagar branch tried to paste another auction notice on my flat claiming recovery of Rs1.40 crore loan dues. In both the cases, the banks did not have search and verification reports and nor did they contact me before sanctioning the two loans."API Shete said, "The banks have suffered huge financial loss, but they have not registered complaints. Instead, they moved the DRTs to claim possession of the flat. We would be writing to them to submit reports as to what inquiry they have done before sanctioning and disbursing the loans and who all were part of the loan sanctioning process."
