FinMin tells DRTs to settle small cases outside tribunals

To address the backlog of cases, the finance ministry has advised debt recovery tribunals (DRTs) and banks to engage borrowers outside the tribunal process, according to a senior finance ministry official who spoke to Business Standard.

- HARSH KUMAR

"There are many small-ticket cases clogging DRTs, contributing to the pendency. We've advised both banks and DRTs to mobilize borrowers directly. For example, if a loan of ₹30 lakh takes three to four years to recover, the time value of money diminishes. If a borrower is willing to settle, we can explore alternative dispute resolution mechanisms, such as Lok Adalats, where settlements can be reached. These settlements still fall under the DRT's jurisdiction, ensuring an official stamp of approval. This could help resolve many cases and ease the burden on DRTs by tackling small-value cases," the official said.

The official also highlighted the overwhelming presence of low-value cases in DRTs. "The jurisdiction of DRTs starts from ₹20 lakh. If you examine cases between ₹20 lakh and ₹1 crore, you'll find that roughly 75 per cent of the total pendency falls within this range," the official added.