MUMBAI, JULY 20: The much-delayed Debt Recovery Tribunal (DRT) for the Western region has finally kicked off operations in Mumbai last week even as the general recovery of funds from defaulted loans - or non-performing assets (NPAs) - is proceeding only at a painfully slow pace and the Reserve Bank of India (RBI) itself is expressing apprehensions about the slow progress.This is the first DRT - which settles disputes in cases relating to recovery of funds - for Mumbai which accounts for a lion's share of banking transactions. ``The delay in setting up a tribunal for the Maharashtra region is not understandable. After the Debt Recovery Tribunal Act was passed in 1993, only nine tribunals have come up. On the other hand, NPAs of banks are rising,'' said a senior banker.Apart from Mumbai DRT, the other tribunals are currently functioning in Ahmedabad, Bangalore, Calcutta, Delhi, Jaipur, Chennai, Guwahati, Patna and Jabalpur. However, the RBI does not seem to be happy about the pace of settlement of casesthrough the DRTs. The problems have compounded with the NPAs touching the Rs 45,000 crore level and threatening to rise further. Besides, financial institutions like IDBI and IFCI are also finding their NPAs rising this year due to the industrial slowdown.The Department of Banking Supervision of the RBI, which conducted a study on the NPAs of banks, observed that ``as at the end of June 1997, out of a total number of 11,700 cases filed and transferred to DRTs involving Rs 8,866.67 crore, only 1045 cases had been decided and a meagre amount of Rs 178.08 crore was recovered''.``The data suggests that the working of DRTs had fallen short of expectations by not creating a fast track system for recovery of bank dues,'' the RBI said, adding, ``banks are of the view that so far the constitution of the debt recovery tribunals has not contributed substantially in recovery of problem loans/enforcement of securities by the bank as they are not equipped with proper infrastructure and requiredflexibility''.According to the RBI, a whopping amount of Rs 13,765 crore involving 78 banks and three financial institutions is locked up in recovery litigations as on March 31, 1998. This reflects a 35 per cent increase over the amount locked up in the previous year. These cases are currently in various courts. It will be a stupendous task for DRTs to take over all these cases and settle them early. ``The track record of DRTs is settling the cases is very poor,'' said a banker.The working group of bankers set up by the RBI last year has suggested several proposals to improve the functioning of the DRTs. This panel had unanimously suggested that DRTs should be revamped to ensure that they are not burdened with more than a specified number of cases. It also felt the need for setting up more DRTs and appellate tribunals with more powers. Another proposal was that the time needed for settling a case should be brought down so that more cases can be taken up and the problems of NPAs solved on a gradualbasis.It was further observed that the procedure followed by the tribunals is more or less is that of civil courts resulting in the same problems faced by the civil courts. This defeats the very purpose of creating debt recovery tribunals. The RBI panel, in fact, has proposed that by privatising some of the procedures without diluting the authority, some of the problems can be solved.One suggestion is that recovery officers in tribunals should be given discretion to take the assistance of agencies like police or professional debt recovery agencies or such private agencies as exigency requires in each case. Considering the magnitude of the problems, bankers feel that the government should comprehensive amendment to the DRT Act in the next session of the Parliament.
