Asset reconstruction companies have sought stronger government intervention to accelerate debt recovery, warning that procedural delays in the tribunal system are slowing the resolution of stressed assets and weakening the effectiveness of India's recovery framework. The industry's appeal comes at a time when lenders are under pressure to clean up balance sheets, improve recoveries and prevent long-running disputes from eroding asset value.
Recovery Bottlenecks
The companies have specifically pointed to Debt Recovery Tribunals, or DRTs, as a critical choke point in the recovery process. According to the proposals, interim stays granted in recovery matters should automatically lapse after two months unless extended through a reasoned judicial order. Industry participants argue that open-ended or repeatedly extended stays can stall enforcement action for months, sometimes years, allowing borrowers to delay repayment while recoverable assets lose value.
They have also called for a more reliable notification process for creditors, saying that lenders and asset reconstruction companies often face difficulties in receiving timely updates on hearings, orders and procedural developments. In their view, better notice mechanisms would reduce avoidable adjournments, improve participation in proceedings and help creditors respond faster to legal developments.
The request reflects a broader frustration within the distressed debt ecosystem, where the speed of enforcement often determines the eventual recovery value. For asset reconstruction companies, time is not merely an administrative concern; it directly affects the economics of resolution. The longer a case remains stuck in litigation, the greater the risk that collateral deteriorates, market conditions change and the likelihood of full recovery declines.
Tribunal Capacity Gaps
A second major concern is the shortage of functioning tribunal capacity. The companies have urged the government to fill DRT vacancies on a timely basis, arguing that understaffed tribunals are a structural drag on the recovery system. Vacancies can lead to heavier caseloads, slower hearings and longer waiting periods for orders, all of which compound the delays already built into the process.
The call for faster appointments also underscores a familiar problem in India's financial dispute resolution architecture: even strong laws can lose force if the institutions tasked with enforcing them are not adequately staffed. In the case of debt recovery, delays at the tribunal level can ripple through the entire credit system, affecting banks' ability to recycle capital and extend fresh lending.
Industry representatives have also asked for enhanced electronic services for litigation, including better digital filing, case tracking and online access to orders and notices. The push for digitisation is aimed at reducing administrative friction and making the recovery process more transparent and predictable. In a system where multiple stakeholders often operate across different cities and jurisdictions, electronic services could cut down on procedural delays and improve coordination between creditors, legal counsel and tribunals.
Sarfaesi's Role
The companies have highlighted the Sarfaesi Act as an essential tool in asset recovery, underscoring its importance in enabling lenders to enforce security interests without first going through prolonged civil litigation. The law has long been viewed as one of the most effective instruments available to banks and financial institutions for recovering dues from defaulting borrowers.
However, the effectiveness of Sarfaesi-based action can still be constrained when borrowers obtain stays or when matters move into the tribunal system and remain pending for extended periods. That is why the industry's proposals focus not only on the law itself but also on the surrounding enforcement ecosystem. Faster tribunal processes, clearer notices and stronger digital infrastructure, they argue, would allow the statute to function as intended.
The broader policy question is whether India's recovery framework can keep pace with the needs of a banking system that continues to manage legacy stress while trying to support new credit growth. For asset reconstruction companies, the answer depends on whether the government is willing to tighten procedural timelines and improve tribunal capacity. Their message is clear: recovery laws are only as effective as the institutions that enforce them, and delays in enforcement ultimately weaken the entire credit chain.