Debt Recovery Tribunals (DRTs): The First Line of Defense
Before Debt Recovery Tribunals (DRTs) were established, banks had to go through regular civil courts to recover dues — a process that was notoriously slow and often took years or decades. The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 created DRTs specifically to speed up this process, giving the financial system a dedicated fast-track mechanism for debt recovery.
What DRTs Do
DRTs are empowered to adjudicate applications filed by banks and financial institutions for recovery of debts. They hear cases, examine evidence, and pass orders for recovery. Crucially, DRTs handle cases involving debts of ₹20 lakhs and above — below this threshold, banks pursue recovery through other legal avenues or Lok Adalats. The specialisation means DRTs develop deep expertise in debt matters, unlike civil courts that handle every type of case.
The Borrower's Role in DRT Proceedings
If a bank files a DRT application against you, you must respond with a counter-claim or defence within the prescribed timeline. You can challenge the outstanding amount claimed, dispute interest calculations, or raise procedural objections. Crucially, borrowers can also file applications under Section 17 of the SARFAESI Act before the DRT to challenge a bank's possession notice — this must be done within 45 days of the possession notice.
Debt Recovery Appellate Tribunals (DRATs)
If either the bank or the borrower is unsatisfied with a DRT order, they can appeal to the Debt Recovery Appellate Tribunal (DRAT). DRATs serve as the appellate body, reviewing the facts and legal arguments from DRT proceedings. One DRAT typically oversees multiple DRTs in a geographical region. The hierarchical structure ensures checks and balances in the system.
Why This Matters for SMEs
If your account has reached the DRT stage, you need a lawyer experienced in debt recovery matters — and an advisor who understands what lenders are actually looking for in a settlement. SolveDet has navigated DRT proceedings alongside legal counsel for SME clients, helping them respond effectively and negotiate outcomes that protect their interests and assets.
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