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Public sector banks’ (PSB) chief executives on Tuesday sought government intervention to speed up the debt recovery process, including faster approvals from District Magistrates, to enable possession of assets from defaulting borrowers.
There are many instances where orders issued by the DRTs are not getting enforced quickly due to delays in approval from District Magistrates and this was brought to the attention of government, said a banker who attended the review meeting chaired by the Finance Minister Arun Jaitley.
Under SARFAESI law, whenever pledged assets have to be possessed from defaulting borrowers, there are occasions when the District Magistrates don’t give their approval on time. This thwarts the efforts of the lenders in making timely recoveries of their dues, bankers said.
The banking system is reeling under an NPA mess amounting to nearly ₹9 lakh crore. The Finance Ministry officials are said to have assured bankers that the matter of avoiding delays at the level of District Magistrates was being taken up in right earnest with the concerned Ministry.
On the Insolvency and Bankruptcy Code (IBC), bankers pointed out that many cases are going beyond the timeline of 270 days specified under the code. This was because the promoters of the debtor company or the bidders themselves were going in for the legal challenge of the processes that are being adopted, instead of waiting for the final verdict from the NCLT and then going in for appeals.
“If at every stage of the process, the steps are challenged, then the entire IBC process gets delayed and the timeline specified under the Code is not getting adhered to. There are cases where even after one year, there is no sight of final outcome in terms of resolution or liquidation,” another banker told BusinessLine on condition of anonymity.
Bankers also sought the Government help to speed up decision making at the DRT level, stating that the system is clogged and there are delays at the level of DRTs.
On capital infusion, almost all the public sector banks, including those under Prompt Corrective Action, underscored the need for frontloading of Government’s capital support during the financial year.
Rather than wait till the end of a financial year, the bankers wanted the Government to ‘frontload’ capital infusion in the early part of the financial year, sources said.
Two Apps — one for MSMEs and the other for financial inclusion (to help track the nearest bank and ATMs in locations around India) — were also launched on Tuesday.
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