Important Laws Relating to Recovery Of Dues | PAPER II – PRINCIPLES & PRACTICES OF BANKING | MODULE B: FUNCTIONS OF BANKS
Important Laws Relating to Recovery Of Dues Important Laws Relating to Recovery Of Dues Introduction In the banking sector, timely recovery of dues is essential to maintain liquidity and financial health. Several legislations have been enacted to streamline and strengthen the process of debt recovery from defaulting borrowers. 1. Recovery of Debts and Bankruptcy Act, 1993 (DRB) The DRB Act was enacted to provide a speedy mechanism for the recovery of debts owed to banks and financial institutions. Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) were set up under this act. Key Features: Applies to debts above ₹20 lakhs. DRTs have powers equivalent to a district court. Reduces the burden on civil courts. 2. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 SARFAESI allows banks to enforc...