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DRT: All About Debt Recovery Tribunal

Banks and financial institutions issue loans to clients with an expectation of receiving installments regularly. It is good for both lenders and borrowers. However, at times, there are situations when lenders do not repay the loan. Either they pay intermittently or become defaulters To facilitate the banks and financial institutions in dealing with such cases, the government of India established Debt Recovery Tribunal or DRT after the passing of the Recovery of Debts due to Banks and Financial Institutions Act (RDDBFI), 1993 These legal aid services have been quite helpful in the past. With the establishment of DRT, it became easy to recover loaned money from the customers. The petitions against orders passed through DRT are presented before the DRAT or Debts Recovery Appellate Tribunal (DRAT). Five such appellate tribunals and 32 debt recovery tribunals in 23 places exist all across the country.  

The role of DRT

The primary goal is, of course, to recover the money from borrowers, which they owe to the lenders. The tribunal settles down the cases of recovery from NPA as confirmed by the lender under the guidelines of the RBI. There is a recovery officer who guides to execute the recovery certificate passed through the presiding officers. According to npa lawyers, the DRT must follow the legal process by emphasizing quick disposal of the cases and fast execution. As far as the applicability of the act is concerned, it is applicable in the whole country. Also, it is applicable where the due amount is below 10,00,000. The act is applicable when the lender files the original application for recovery.  

Composition of DRT

The tribunal is comprised of one individual who is the presiding officer appointed by the government of India through a notification.

The government may allow any individual as a presiding officer from any tribunal set under any law. It is to discharge the powers of the presiding officer in any of the cases presented before the tribunal.

The central government can establish more than one tribunal to carry out the jurisdiction under this act. The government can also stipulate the area where the tribunal may carry out the jurisdiction.

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Sarfaesi Act: Security Interest Act, 2002

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the SARFAESI ACT) is an Indian law. It allows banks and other financial institutions to auction residential or commercial properties to recover loans.

Under this act secured creditors (banks or financial institutions) have many rights for enforcement of security interest under section 13 of SARFAESI Act, 2002. If borrower makes any default in repayment of loan instalment or interest and his account is classified as Non-Performing Asset (NPA) by secured creditor, then secured creditor is required to issue written notice to the borrower for repayment of due in full within 60 days by clearly stating amount due and intention for enforcement. If borrower does not discharge dues in full within 60 days, then Secured creditor may take possession of the mortgaged assets under section 13(4) of SARFAESI ACT WITHOUT INTERVENTION OF ANY COURT OR TRIBUNAL but with a prior notice to the borrower.

The secured creditors will then file an application under section 14 of the SARFAESI ACT, in the Metropolitan Magistrate Court or The District Magistrate Court as per the jurisdiction of the mortgaged assets in order to obtain the order for forceful physical possession of the assets. Generally the orders under section 14 of the SARFAESI ACT are passed in a period of 3 months in favour of the secured creditors.

The borrower may approach competent court to obtain stay against such orders even against the notice issued under section 13(4) of the said Act.

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Get an overview of the Sarfaesi Act Security Interest Act, 2002, including its provisions, impact on the banking sector Visit our website to know more

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NPA Recovery Process | Management Policies | NPA in India

NPA Recovery & Revival Steps which can be adopted by the Banks

The Bank has to assess the exact reason for NPA.

The Bank should assess and grant the additional working capital requirement so that the borrower can restart its stuck business.

By compromise, negotiated deal, by reducing interest or by waiving penalty so for levied in the account of borrower

By converting a portion of Advance of funded term loan to enable the unit to generate income

Bank can allow operations in the account when the unit is in bad shape, but retain a small portion to enable it to service the interest and thus unit will not be classified as NPA.

Preventive and curative measures to be taken by Banks for containment of NPA

Proper credit appraisal

Identifying the weaknesses Of assets through early warning signals

Up-gradation of assets through various methods

Recovery of NPAs through compromise settlements, announcement of OTS

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Debt Recovery Tribunal: What you need to know about Debt Recovery

FACTS ABOUT DEBT RECOVERY TRIBUNAL. WHAT YOU NEED TO KNOW ABOUT IT Banks and financial institutions issue loans to clients with an expectation of receiving installments regularly. It is good for both lenders and borrowers. However, at times, there are situations when lenders do not repay the loan. Either they pay intermittently or become defaulters To facilitate the banks and financial institutions in dealing with such cases, the government of India established Debt Recovery Tribunal or DRT after the passing of the Recovery of Debts due to Banks and Financial Institutions Act (RDDBFI), 1993 These legal aid services have been quite helpful in the past. With the establishment of DRT, it became easy to recover loaned money from the customers. The petitions against orders passed through DRT are presented before the DRAT or Debts Recovery Appellate Tribunal (DRAT). Five such appellate tribunals and 32 debt recovery tribunals in 23 places exist all across the country.

The role of DRT

The primary goal is, of course, to recover the money from borrowers, which they owe to the lenders. The tribunal settles down the cases of recovery from NPA as confirmed by the lender under the guidelines of the RBI. There is a recovery officer who guides to execute the recovery certificate passed through the presiding officers. According to npa lawyers, the DRT must follow the legal process by emphasizing quick disposal of the cases and fast execution. As far as the applicability of the act is concerned, it is applicable in the whole country. Also, it is applicable where the due amount is below 10,00,000. The act is applicable when the lender files the original application for recovery.

Composition of DRT

The tribunal is comprised of one individual who is the presiding officer appointed by the government of India through a notification.

The government may allow any individual as a presiding officer from any tribunal set under any law. It is to discharge the powers of the presiding officer in any of the cases presented before the tribunal.

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https://www.npaconsultant.in/blog/blog-details/facts-about-debt-recovery-tribunal-what-you-need-to-know-about-it

Debt Recovery Tribunal The government of India established Debt Recovery Tribunal after the passing of the Recovery of Debts due to the Banks and Financial Institutions Act RDDBFI,1993

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Debt Recovery Tribunal The government of India established Debt Recovery Tribunal after the passing of the Recovery of Debts due to Banks and Financial Institutions Act RDDBFI ,1993

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Non Performing Asset is an advance or loan that is overdue for more than 90 days Visit our website to know more about how NPA works, its types and NPA financial services in India

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We at NPA Consultant arrange funding for NPA accounts settlement through private equity, ARC, SPV funding etc We provide funding in different ways like NPA takeover, NPA Loan, NPA Finance etc Our core area of working is to arrange financial assistance for Non Performing Asset accounts

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We at NPA Consultant arrange funding for NPA accounts settlement through private equity, ARC, SPV funding etc We provide funding in different ways like NPA takeover, NPA Loan, NPA Finance etc Our core area of working is to arrange financial assistance for Non Performing Asset accounts

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NPA Consultant in India is a Private Limited headquartered at Mumbai We provide various type of NPA in India services like legal, financial etc Proper management of npa is necessary NPA Consultant has a proper team of every field like legal, banking, finance etc

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NPA Debt Settlement can be done by arranging funds We at NPA Consultant, helps our client in NPA Recovery Process by arranging funds from various sources

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NPA Consultants has a team of distinguished experts from the fields of banking, legal and finance Our legal team can properly handle issues related to DRT Legal Solutions and National Company Law Appellate Tribunal Visit us now

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We at NPA Consultant arrange funding for NPA accounts settlement through private equity, ARC, SPV funding etc We provide funding in different ways like NPA takeover, NPA Loan, NPA Finance etc Our core area of working is to arrange financial assistance for Non Performing Asset accounts

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What is the process of one-time settlement in banking? | NPA Management

Why do people take loans? It is a great way of helping your finance for various things. You may take a loan for completing your education, buying a new house, the wedding of your kids, to go abroad, or anything else.

If you are a company, then you will take a loan to diversify your business or launch a new project.

You make great planning and ensure that repayment of the loan is done in time. However, no matter how systematic your repayment plan may be, you cannot foresee all the possible bottlenecks. You may become a victim of unforeseen circumstances. There could be an unexpected loss in the business, or you lose your job due to an illness.

Such circumstances will seriously hamper the ability to repay your loan. You will miss the installment and get follow-up calls and reminders from the bank. It affects your credibility and market value.

When a bank or financial institution sanctions a loan, it expects that the loan will be repaid within the stipulated time. For a bank, a loan is an asset that generates income in the form of interest.

When the loan is not paid, it becomes an NPA or Non-Performing Asset. NPA is not desirable for any financial institution. When it goes beyond a threshold, it becomes a risk to the survival of the bank. Hence, it requires concrete npa management methods.

When a bank fails to recover the loan, it approaches the borrower with options like a one-time loan settlement. Though it looks like a simple offer, it may ruin the credit score of the borrower.

What is a One-Time Loan Settlement?

It is part of the overall npa management policy of a bank or financial institution. In this process, the bank or financial institute agrees to accept a smaller amount instead of the entire due amount. When it does so, the bank waives off the rest of the amount and makes repayment easier for the borrower. The option may be offered by the bank after six months of non-repayment.

The bank takes various measures to investigate the case before arriving at the conclusion. It will allow them to validate the reason for not paying the loan.

How Does the process of one-time settlement carry out?

First, the bank should believe that the reason for non-payment is legitimate. The bank offers a moratorium period. The option is for those borrowers who want to pay the amount in one go. After an agreement, the bank will waive off a part of the outstanding loan amount to make the repayment easy.

How much amount will be written off will depend on the gravity of the financial condition and the ability of the borrower to repay the loan. Since the borrower is agreed to settle the loan, its repayment status will be recorded as “settled” and not “closed”. The credit score of the borrower will be affected by the difference.

One-time settlement is considered an important tool of npa management policy.

Alternatives

It is quite obvious that opting for a one-time settlement is not advisable unless it is necessary. There are some other alternates to it.

The borrower should liquidate the savings instead of applying for a loan. Also, it should negotiate with the bank to request an extension for the repayment term. Or, it should ask for a restructured repayment plan.

The borrower can request the bank to hold off the interest rate or reduce it for some time.

One-time settlement is the last resort. For a bank also, it is not a profitable proposition. Therefore, it will use it only when there is no other solution.

For more information - https://www.npaconsultant.in/blog/blog-details/what-is-the-process-of-one-time-settlement-in-banking-1

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The handling of NPA Management and debt settlement are both vital to a bank s financial stability The debt balance cannot be reinvested until it is repaid

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An NPA management tool which identifies risks and gives early warning signals to take proactive actions against NPAs For moredetails call or visit now at our website