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Debt Recovery Tribunal (DRT)
A Tribunal for Debt Recovery The Recovery of Debt and Bankruptcy Act of 1993 created DRT, a quasi-judicial statutory authority. Its goals are case adjudication and loan recovery from banks and other financial entities. The Indian government increased the required minimum amount to file a complaint under a DRT to 20 lakh rupees in 2020. The Debt Recovery Tribunal DRT is led by the Presiding Officer, who was chosen by the Central Government.
The Chairman of the Debt Recovery Appellate Tribunal (DRAT) is the person in charge of hearing appeals against DRT orders. Banks and financial organizations submit loan recovery applications to the DRT, which has authority over the debtor’s place of business or domicile. The DRT has authority during adjudication that is similar to that of a District Court.Additionally, the Debt Recovery Tribunal (DRT) has recovery officers responsible for executing the orders it issues.
Debt Recovery Laws
The Recovery of obligations and Bankruptcy (RDB Act), 1993 is a law that establishes tribunals for the swift resolution of disputes pertaining to bank and financial institution obligations, as well as for matters related or incidental thereto.
The Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest (SARFAESI) Act, 2002 is a piece of legislation that governs the aforementioned activities as well as topics incidental or related to them.
What is the maximum and min limit of DRT?
Referred to as the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act), the name “DRT” refers to Debt Recovery Tribunals. But without the need for court intervention, banks and other financial institutions can recover secured loans according to a process established by the SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002).
A bank or other financial institution must have a debt of one crore rupees (₹1,00,00,000) in order to pursue action under the SARFAESI Act. The SARFAESI Act does not specify a maximum amount.However, the minimum debt required to approach a Debt Recovery Tribunal (DRT) under the RDDBFI Act is twenty lakh rupees (₹20,00,000). Once more, the RDDBFI Act does not specify a maximum amount for contacting the DRT.
Features
- The purpose of the Debt Recovery Tribunal (DRT) is to resolve matters involving the restoration of outstanding sums owed on non-performing assets, or NPAs. As per RBI guidelines, the banks declare them.
- The Recovery of Debt and Bankruptcy Act of 1993’s Section 4 states that the DRT may only have one member, known as the Presiding Officer.
- Banks and other financial institutions can contact the DRT in circumstances where the debt recovery exceeds 20 lakh rupees.
- It is imperative that DRT and DRAT uphold the Principles of Natural Justice.
- To present cases before the DRT, one is not required to hold a law degree.
- It is required of DRTs to finish cases in six months.
- The harmed party must deposit 75% of the sum established by the DRT before bringing a case before the DRAT in opposition to its order.
- The Centre can appoint one or more Recovery Officers as an employee of the Tribunal.
Powers and Functions
- A Tribunal for Debt Recovery The Recovery of Debt and Bankruptcy Act of 1993 and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act of 2002 are laws that DRT is authorized to enforce.
Under section 17 of the collection of Debt and Bankruptcy Act-1993, DRT is authorized to consider applications pertaining to debt collection from banks and financial organizations.
The Debt Recovery Tribunal (DRT) makes decisions in cases just like a District Court would.
With the exception of the Supreme Court and High Courts, all courts are prohibited from making decisions on debt recovery-related cases by Section 18 of the Recovery of Debt and Bankruptcy Act-1993. - The DRT and the DRAT’s jurisdiction is completely limited to situations that are listed in Section 17 of the Recovery of Debt and Bankruptcy Act-1993, according to the Supreme Court’s ruling.
- An update to the statute in 2000 added Section 17A. It outlines the authority of the DRAT Chairperson.
conclusion
Banks and other financial institutions have received some assistance from the Debt Recovery Tribunals (DRTs) in resolving the issue of non-performing assets, or NPAs. However, these Tribunals are also dealing with issues that ordinary Courts used to deal with. These include the backlog of cases, poor recovery rates, case settlement delays, etc. More DRTs and DRATs should be set up across the nation. For improved performance, the Recovery Officials and other employees require adequate training and tools.
