Govt Panel Mulls SARFAESI & DRT Act Amendments For Swift Debt Recovery

New Delhi, Mar 20 (KNN) In a bid to accelerate the debt recovery process, the Finance Ministry has set up a panel on potential amendments to the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act and Debt Recovery Tribunals (DRT) Acts.

The proposed changes include providing legal validation to e-notices sent to debtors, streamlining the recovery procedure, sources have revealed, reported PTI.

Chaired by an Additional Secretary, the committee overseeing these discussions has conducted several meetings, indicating an advanced stage of deliberation.

Last month, the Finance Ministry engaged in extensive consultations with key stakeholders from banks and DRT to enhance the efficiency of debt recovery mechanisms, particularly within DRTs.

Last month, the Finance Ministry held extensive deliberations with the top brass of banks and Debt Recovery Tribunals (DRTs) to enhance the efficacy of DRTs for expeditious recovery of debts.

Sources within the Ministry underscored the objective of making the debt recovery process less cumbersome and more efficient.

Plans include introducing provisions to grant legal recognition to e-notices, such as SMS and emails sent by banks, thus expediting debt recovery.

While the Debt Recovery Tribunals (DRTs) Act of 1993 was initially intended to provide a legal framework for the prompt adjudication and recovery of debts owed to banks and financial institutions, its effectiveness has been limited.

Consequently, the SARFAESI Act of 2002 was enacted to address these limitations and establish a more robust framework for debt recovery.

Over the years, the government has introduced several amendments to both the DRT and SARFAESI Acts. The most recent changes were enacted in 2016, aiming to enhance the effectiveness of debt recovery processes.

These amendments, carried out through the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, aimed to create a faster and more transparent system to tackle bad debts in the banking sector, facilitating a swifter recovery process for banks and financial institutions.

(KNN Bureau)