SALIENT FEATURES OF “The Recovery of Debts Due to Banks and Financial Institutions Act (1993)”

The Recovery of Debts Due to Banks and Financial Institutions  Act (1993) is the act which aims to establish and provide establishing of tribunals that can recover debts which are due by people to banks and financial institutions.

The Recovery of Debts Due to Banks and Financial Institutions  Act  contains total number of 37 sections and 6 chapters. The act was established on 27th of August 1993.



The narasimhan and tiwari committee had the same point of view in 1991 , to set up special tribunals for matters related to debt recovery . Their recommendation resulted in the enactment of an act known as “The Recovery of Debts Due to Banks and Financial Institutions  Act (1993)” . under this act 2 types of tribunals were created

  1. “Debt recovery tribunals”
  2. “Debt recovery appellant tribunals”

And they were given powers for arbitration and adjudication on the matters related to recovery of debts. The first Debt recovery tribunal was opened at Kolkata in 1994 (April).


Our life will be a more difficult if banks and financial institutions are not there . They provide us monetary support in our life . They gave loans to people of the people of the country. But some people in country does not repay the loans either by will/ choice or they are not able to repay it. But what will happen  ?

They ( banks and financial institutions) have always been facing many problems and difficulties to get aur recover the amount they have given or provided as loans to people . In older time they were facing difficulty and so to overcome such problems(recovery of loans) The Recovery of Debts Due to Banks and Financial Institutions Act was formed in 1993. So that the blocked amount can be recovered easily.

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And to overcome these problems financial system committee contemplated to create a tribunal , specially for this purpose ( recover of loans)and that these matters can be adjudicated speedly and successfully .

The committee also gave advice or suggested to make some tribunal that will specially follow summary view procedure. By these suggestions of the committee the act was introduced in parliament.


“An Act to provide for the establishment of Tribunals for expeditious adjudication and recovery of debts due to banks and financial institutions and for matters connected therewith or incidental thereto”[1]

  • Overcome problems which were being faced by banks from a long time.
  • Easy recovery of loans given .
  • Speedy justice on specific matters.
  • Unblock the money which is blocked .


  • BANKS : “According to 2(d) of the act ‘bank’ means—
  • banking company;
  • a corresponding new bank;
  • State Bank of India;
  • a subsidiary bank; or
  • a Regional Rural Bank”


BANK in general means  the financial institutions which provide services (Financial) like providing loans.

DEBT : According to the act

“2(g) debt means any liability (inclusive of interest) which is claimed as due from any person by a bank of a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on, the date of the application”

DEBT in general means the total of money which a person owes to someone which he have to return / repay to someone.


FINANCIAL INSTIUTIONS : According to the act , section 2  “(h) financial institution means—

(i) a public financial institution within the meaning of Section 4A of the Companies Act, 1956 (1 of 1956); (ii) such other institution as the Central Government may, having regard to its business activity and the area of its operation in India by notification, specify”

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IN GENERAL IT MEANS : They are the companies which are in the bussiness of transaction financially or monetary.


The debt recovery tribunals are the tribunals created under the act the aim is to provide speedy justice to lenders  .  They are made so that the borrowers can be helped by easy unblocking on repayment of  loans . They ensure the recovery of debt . They are constitued under section 3 of the act , The matters under it are adjudicated under 180 days and appeal can be filled under DRAT under 30 days .

A total of 39 Debt recovery tribunal are their currently present in india and 5 Debt recovery appelant tribunal.


The first aim of drt is to Recovery of money/loan from borrowers which is due to banks and other financial institutions.

They provide speedy trial  to ensure that the money is reached in the hands as soon as possible .


Section 4 of the act satates about the composition of DRT

It includes one presiding officer and other staff members.


Section 18 of the act bars/prohibits all the courts except high courts and supreme court to adjudicate the matters related to recovert of debts.


Against the order of DRT = DRAT

Against the orders of DRAT = High courts and supreme court.


Chapter 4 of the recovery of debt due to banks and financial institutions act (1993) deals with the process follwed by DRT while adjudicating the cases.


  1. ”Filling of application” – The banks and financial institutions can fill the applications in the DRT which are within there jurisdiction.

They can file the application by 2 routes . Either direct applicatin or through SARFAESI route

The application should be filled along with proper requisite fees.

  1. “Issue of summon/Notice” shall be made by the bank after considering the application and getting the proper prescribed fees.
  2. “Filling of reply” – the defendant shall present a written statement for his defence within 30 days alomg with proper documents of his defence. If he fails the DRT can extend timeof not more than 15 days .
  3. Claim for counterclaim can be made on first haring
  4. If the defendant admits it liability than the order to be made and the amount to be paid within 30 days.
  5. The DRT can also pass interim orders (injunction , stay order) to restrict or transfer the property further .
  6. The tribunal after hearing both the parties shall give final judgement.
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Any person aggrieved from the order of DRT can file an appeal to the DEBT RECOVERY APPELANT TRIBUNAL within 30days of the order passed by DRT and appeal can be made to High court and supreme court for the order passed by DRAT ( Debt recovery appeallant tribunal).

CASE : Axis bank V. SBS organic  & ors.[3]

“The supreme court of india held that the appeal in DRAT would be entertained only on the condition that the borrowers deposits the 50% of the amount in terms of the orders passed by DRT or 50% of the sum duefrom the borrowers as asserted by the secured creditors whichever is less”



The sole aim of the enactment of this act was to help banks and financial institutions recover their blocked loans. The act provides speedy justice to them and allows them to get their money from the borrowers. Many banks faced difficulties in getting the money back from the borrowers but after this act came into force it provided much assistance to them. The only demerit is that the number of tribunals and appelant tribunals are less so it is not easy for everyone to present a case their.

[1] “The Recovery of Debts Due to Banks and Financial Institutions Act (1993)”

[2] “The Recovery of Debts Due to Banks and Financial Institutions Act (1993)”

[3] 2016


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