The government has instructed public sector banks to revise their approach to debt recovery tribunals (DRTs) to improve efficiency and streamline the way cases are filed. Officials shared that banks are also looking into the possibility of withdrawing cases from multiple jurisdictions and refiling them once assets are traced.
An official stated that the goal is to simplify the process and eliminate the need for multiple appeals in different jurisdictions against a single borrower. The new approach would allow for consolidated filing of cases, which would help streamline recovery efforts. It would also address complaints from borrowers who are willing to settle their debts but face difficulties due to multiple cases in different locations.
As of the latest data, around 185,076 cases have been pending for over 180 days before DRTs.
Banks are also reviewing whether there are provisions that would allow them to withdraw cases in jurisdictions where they do not have any collateral. However, this may require changes in existing laws, which are being explored. The process may also involve consultations with other stakeholders, including the Reserve Bank of India (RBI), according to a bank executive who wished to remain anonymous.
Last year, the government had directed banks to establish monitoring and oversight mechanisms for better management of cases pending with DRTs. Banks were also asked to create a clear policy for handling both small and high-value cases to optimize recovery.
A review of the reduction in case pendency and the effectiveness of recovery efforts is scheduled before the end of the current fiscal year, according to the official.
According to the RBI’s latest financial stability report, the gross non-performing assets (GNPA) ratio for 46 banks may rise to 3% by March 2026, up from 2.6% in September 2024. The report also highlighted that the GNPA ratio for public sector banks (PSBs) could increase to 7.3% by March 2026, up from 3.3% in September 2024, while private lenders may see their GNPA ratio rise to 2.9% from 1.9%.
The government had previously instructed banks to periodically review the performance of empanelled advocates and rationalize how cases are assigned to them based on their performance.
