The Finance Ministry conducted thorough discussions with senior bank officials and Debts Recovery Tribunals (DRTs) to improve the effectiveness of DRTs in swiftly recovering debts.
The Finance Ministry has taken a significant step towards expediting the debt recovery process by establishing a panel to propose amendments to the SARFAESI Act and the RDB Act. One of the key amendments being considered is granting legal recognition to e-notices sent to debtors. The committee, headed by an Additional Secretary, has been actively engaged in discussions to enhance the efficacy of the debt recovery process.
Last month, the Finance Ministry conducted extensive discussions with top bank officials and Debts Recovery Tribunals (DRTs) to improve the functioning of DRTs for faster debt recovery. The committee aims to make the debt recovery process more efficient and less cumbersome. One of the proposed amendments includes providing legal sanctity to e-notices and enabling SMS and emails sent by banks to be considered as formal notices. This initiative is expected to streamline the debt recovery process significantly.
The RDB Act, enacted in 1993, was intended to expedite the adjudication and recovery of debts owed to banks and financial institutions. However, the effectiveness of this legislation was found to be limited, prompting the enactment of the SARFAESI Act in 2002. The SARFAESI Act aimed to address the shortcomings of the RDB Act and provide a more robust framework for debt recovery.
Over the years, the government has made several amendments to the RDB Act and the SARFAESI Act to improve debt recovery mechanisms. The last major amendments were made in 2016, with the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016. These amendments were aimed at creating a faster and more transparent system for dealing with bad debts in the banking system.
In addition to legislative changes, the government has also implemented various initiatives to control non-performing assets (NPAs). As a result, the net NPAs of Scheduled Commercial Banks (SCBs) have declined significantly from Rs 2.31 lakh crore (3.13 per cent) in March 2015 to Rs 1.36 lakh crore (0.95 per cent) in March 2023.
In conclusion, the Finance Ministry's efforts to amend the SARFAESI Act and the RDB Act are commendable, as they aim to simplify the debt recovery process and make it more effective. These amendments, coupled with other initiatives to control NPAs, are expected to have a positive impact on the banking sector and contribute to the overall health of the economy.