NEW DELHI: With trillions of crore rupees locked up in cases under the Debt Recovery Tribunals (DRTS) and National Company Law Tribunals (NCLTs), the government has asked chiefs of Public Sector Banks (PSBs) to monitor the top twenty defaulter loan accounts personally for faster recovery. The move is expected to boost the banks’ bottom lines, as the bad loans have already been fully provisioned.
After the gross non-performing assets (GNPA) of the PSBs rose to a high 14.5% as of March 2016, the government took a slew of measures such as strengthening the banking regulatory framework, amending the recovery laws, enacting comprehensive insolvency and bankruptcy legislation, and establishing a public sector asset reconstruction company. These measures have nursed the credit sector back to sound health, and the GNPA ratio shrunk to 2.8% in March 2024.
“The PSBs’ balance sheets have improved due to the technical write-offs. MDs have been told to review the top 20 cases in each bank every month. These recoveries will be pure profit,” a senior official told FE.
Financial Services Secretary Vivek Joshi, Insolvency and Bankruptcy Board of India chairperson Ravi Mital and Corporate Affairs Secretary Manoj Govil are also monthly reviewing the top twenty insolvency cases to fast-track recovery processes. These top cases include Jaiprakash Associates and Amtek Group.
Currently, 2.2 lakh cases are pending with DRT suits amounting to Rs 16.27 trillion, most of which were dues to PSBs. Similarly, 2,431 cases involving Rs 1.52 trillion are pending Debt Recovery Appellate Tribunals (DRATS). In both cases, staff shortages were cited as major reasons for the high pendency of cases.
Currently, there are 39 DRTs and five DRATs. Taking cognizance of manpower shortages in DRTs, Finance Minister Nirmala Sitharaman announced in the Budget that the government will take steps for reforming and strengthening these Tribunals. Additional tribunals will be established to speed up recovery, she said.
In the last five years on average, 1,500 cases have been filed in each DRT. But they were able to decide on 843 cases on average. Recovery through DRTs was Rs 12,879 crore in FY22, Rs 7,669 crore in FY23 and Rs 11,117 crore in FY24.
The minister has also said that appropriate changes to the Insolvency and Bankruptcy Code (IBC), reforms and strengthening of the tribunal and appellate tribunals will be initiated to speed up insolvency resolution. Additional tribunals will be established. Out of those, some will be notified to decide cases exclusively under the Companies Act, she added.
In the eight years since 2016, 31,394 corporate debtors involving a value of Rs 13.9 trillion have been disposed of (including pre-admission case disposals) as of March 2024, under IBC.
Source: The Financial Express
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