Finance Ministry urges banks to enhance oversight for efficient management of debt recovery cases

The Finance Ministry has directed the banks to put in place robust monitoring and inspection systems to strengthen case management practices in DRTs. This decision was taken after a meeting presided over by Financial Services Secretary M. Nagaraju, which had consultations with chairpersons of DRATs and presiding officers of DRTs.

Best Practices for Better Results

The meeting saw best practices that are now being executed in DRTs be shared amongst the participants. These best practices were emphasized because it could be adopted by all tribunals to make a more potent impact. The ministry, in its recommendation, said that banks must differentiate between small and high-value cases so that policies may be defined effectively for each case and recovery may be optimized.

Collaborative Efforts to Reduce Pendency

It would also focus on the collective effort for all stakeholders by reducing case pendency and increase recovery rates. It would unblock much more capital currently invested in cases now pending than is being produced currently and would be utilized more productively in the economy.

Consideration of Transaction Costs

When setting policies over settlements, the banks were reminded of the transaction costs implication of any potential quest for cases pending recovery, thus ensuring that strategies are economically viable at all times.

Implementation of New Regulations

The meeting concluded by opting to embrace new DRT Regulations 2024 that have several improvements over the previous DRT Regulation 2015. The latest regulations are meant to streamline the DRT process such that it will be effective and consume minimal time in the faces of all the parties engaged. In keeping with this approach, the Finance Ministry will further continue the development of the recovery process of debts, thereby reaping benefits to the greater economy.