24 March 2019: The mounting pressure on banks to improve financial profile through recoveries has prompted lenders to send an ‘SOS’ to the finance ministry on the tardy decision making and pile-up of cases at the Debt Recovery Tribunals (DRTs) and its appellate forum the Debt Recovery Appellate Tribunal (DRAT).
The tribunals are set to become designated forums for insolvencies and resolution of non-corporate entities under the Insolvency and Bankruptcy Code (IBC).
The situation could worsen at both the forums as IBC cases are referred to them. This is because they are already grappling with regular cases.
A senior bank executive said, “The delays at the tribunals are impacting us adversely, be it in terms of costs (read provisions), litigation or manpower. This is over and above the uncertainly over the timing of resolution of high-profile cases of the National Company Law Tribunal (NCLT).”
Infrastructure is insufficient at these forums. Also, adjournments are granted by the tribunals frequently, postponing the fate of decisions. Moreover, positions of presiding officers, recovery officers and registrar are lying vacant, the IBA said in its communication.
Out of the 44 DRTs and the sole DRAT, 11 benches have vacancies (of presiding officers) of which three are in crucial locations like Mumbai and Kolkata.
One of the DRTs in Mumbai is operating on a slow pace after the fire incident. New matters are not taken up. Even the interim applications have been held up due to paucity of time and place.
Urgent steps are needed to repair the situation. Both have to be provided with sufficient infrastructure and people on a priority basis, the IBA said in a communication.
There has to be new DRTs and fortnightly review of pending cases. These steps will go a long way in hastening the process of resolution and recovery. It will also boost the capital of banks and thereby reduce dependency on infusion of capital.