Daily Current Affairs 2021 Govt increases limit for filing debt cases | Daily Current Affairs 2021

Govt increases limit for filing debt cases

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Aiming to reduce the pendency of cases in the 39 Debt Recovery Tribunals (DRT) in the country, the Centre on Thursday doubled the limit for filing loan recovery applications by banks and financial institutions from Rs 10 lakh to Rs 20 lakh.

A Finance Ministry notification, ‘The pecuniary limit from Rs 10 lakh to Rs 20 lakh for filing application for recovery of debts in the Debts Recovery Tribunals by such banks and financial institutions’.

This means that as a result, any bank or financial institution or a consortium of banks or financial institutions cannot approach DRTs if the amount due is less than Rs 20 lakh. DRTs were first set up under the Recovery of Debts Due to Banks and Financial Institutions Act 1993, also known as the DRT Act. The objective was speedy recovery of bad loans. Under the existing norms, a DRT is supposed to dispose of a matter referred to it within 180 days of the receipt of an application and an appeal can be filed against a DRT order with the Debt Recovery Appellate Tribunals (DRATs). However, the 180-day deadline is rarely followed by the tribunals and cases are heard for years. Lack of adequate staff, proper infrastructure and huge pendency of cases drags down the speed of resolution process.
Some DRTs do not even have permanent offices and even the process of digitisation was not complete at the offices. In fact in March, the Bombay High Court had ordered the Finance Ministry to provide offices and fill the vacancies for DRT in Mumbai, which was without office.
As on December 31, cases with a total worth of Rs 4.5 trillion were pending before various DRTs compared to Rs 3.75 trillion in the previous year.

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