The amendment to the DRT Act will strengthen these tribunals and focus on improving the existing infrastructure, including the computerised processing of court cases to support reduction in the number of hearings and faster disposal of cases.
“The DRT will become the country’s first online court,” Finance Minister Arun Jaitley had said in March, at the second edition of Gyan Sangam. Changes in the Sarfaesi law will enable non-institutional investors to invest in security receipts issued by asset reconstruction companies (ARCs,) which buy bad loans from banks at a discount.
In case of corporate bond defaults, the changes will allow bond and debenture trustees to use provisions of Sarfesi Act as well. So far only banks and financial institutions can use these rules in bond default cases.
The change may give “secure creditors” the first right to auction an asset in order to recover the dues. This may take precedence over state laws. The amendment would also aim at reducing the number of adjournments so that litigation time is reduced. Besides, the government is setting up a central registry for lodging records of multiple loans given to same parties. “We have got inter-ministerial approval for amendment of Sarfesi Act and DRT laws. It will help make recoveries faster for banks,” said a finance ministry official.