Presently the Biggest challenge before the Banks in India is Non Performing Assets (NPAs). What are the legal tools available with banks for resolution of NPAs?

Answer 2(c) Following legal tools are available with banks for resolution of NPAs: Debt Recovery Tribunals (DRT): DRT is special court for recovery of the dues of Banks/Financial Institutions from the borrowers. The Act came into operation for 24.06.1993. This Act is applicable for the debt due to any Bank or Financial Institution or a consortium of them, for the recovery of debt above rupees ten lakhs. Any aggrieved party can appeal to Debt Recovery Appellant Tribunal (DRAT) against the decision of DRT, subject to fulfillment of some conditions. Lok Adalats: Lok Adalats are organised under the Legal Services Authorities Act, 1987. They are intended to bring about a compromise or settlement in respect of any dispute or potential dispute. Lok Adalats derive jurisdiction by consent or when the court is satisfied that the dispute between the parties can be settled at Lok Adalats. It should be guided by the principles of justice, equity, fair play and other legal principles. In case of settlement, the award should be binding on the parties to the dispute. No appeal should be lie in any court against the Award. SARFAESI Act, 2002: This Act empowers the Banks and Financial Institutions (FI) to recover their Non Performing Assets (NPAs) without the intervention of court. If the borrower and/or guarantor fail to comply with the 60 days' notice issued by the Bank or FI in repayment of full dues, then the Bank/FI can: Take possession or the management of secured assets of the borrower without the intervention of Court/DRT. Appoint person to manage the taken over secured assets. Bank/FI may sell the secured assets giving 30 days notice after possession. Special features: Under certain circumstances properties cannot be attached, such as: Any security interest securing repayment of any financial assistance not exceeding rupee one lakh. Security interest not registered under the Act. Any security interest created in agriculture land. A pledge of movables. Govt. of India came out with new recovery tool for bank through "The Insolvency and Bankruptcy Code 2016". The Act allows Banks, to apply for insolvency of borrower on the default of loan. If borrower is Corporate, Bank will apply to NCLT and in other cases Bank will apply to DRT.