Hyderabad DRT Bar Association criticizes  bad loan recovery practices.

That the Banks adopt extremely questionable and unethical practices in their loan recovery procedures is well known. However these are rarely discussed in public domain for fear of being branded either as wilful defaulter or someone who speaks for wilful defaulters. However this seems to be slightly changing in recent times.

At the conference held under the aegis of DRT Hyderabad Bar Association the theme was bad recovery procedures by Banks. The conference was attended by Sr Judge, Justice G. Rohini AP High Court, as well as by Presiding Officer of DRT Hyderabad Shri K. Sai Mohan. 

K. Sai Mohan, Presiding officer of Debts Recovery Tribunal  Hyderabad is reported to have descried the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) as ‘draconian’.   He has advocated that the scope and powers of  the Debts Recovery Tribunal u/s 17 of the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993  should be expanded and it should include suitable directions to banks keeping the need of ‘recovery of dues’ in mind.  He has said that Banks and financial institutions must follow RBI guidelines while classifying the borrowers’ accounts as NPAs.  

Justice G. Rohini, senior judge of AP High Court who also participated in the function is reported to have said that  that Debts Recovery Tribunals  should give a fair opportunity and conduct a fair trial considering various lacunae in the recovery system.    She is also said to have advised bank  to be conscious of the plight of the borrowers while taking possession of residential properties and disposing them, the banks should view the plight of the borrowers.”

No doubt DRTs and DRATs have been constituted for the expeditious recovery of bank dues.  But the hearing should be transparent and fair to both the parties. Recently the Supreme Court lamented on this very point and hoped that the Tribunals  will give a fair trial to alol the parties [Standard Chartered Bank v/s  Dharminder Bhohi and others].  Even within the provisions of the existing Act much can be done to give a feeling of a fair trial to the parties. 

DRTs routinely refuse production of documents from banks on the ground that it is a ploy to delay proceedings.  The same document is however available through the RTI route – but this route takes a long time – some time months, and in the meanwhile DRTs dispose off the cases.

Latches by banks is condoned on the ground that ‘public money’ is involved, but parties are heavily fined even if they move minor applications which is provided under the law.  The only thing is that it has not been examined for. 

There is lot of bitterness among the defendants that they have not been heard properly. The DRT’s are under the administrative jurisdiction of the Ministry of Finance which is the applicant /defendant in all the cases before the DRTs.   That been the case the DRT’s are under enormous pressure to crunch up number of disposals resulting in miscarriage of justice, bitterness and feeling of being unheard by a judicial body. 

The mechanism for filing appeals is very complicated, cumbersome and costly. The DRAT’s are located at five different metropolitan cities far remain from the main land (Mumbai, Calcutta, and Chennai) making parties travel long distance to appear in the matter.