Asset reconstruction companies have asked the government to intervene more decisively to speed up debt recovery through Debt Recovery Tribunals, arguing that procedural delays continue to weaken the effectiveness of India's stressed-asset resolution system. The industry's appeal comes at a time when lenders are under pressure to recover long-pending dues more efficiently, and when the pace of enforcement remains central to the health of bank balance sheets.
Recovery Bottlenecks
The companies want interim stays granted in recovery cases to lapse automatically after two months unless specifically extended by a tribunal. According to the industry's position, such a rule would prevent borrowers from using temporary relief orders to stall proceedings for extended periods, a tactic that has often slowed enforcement and reduced the practical value of recovery action. They also want a stronger notification framework so that creditors are properly informed and can respond without avoidable delay.
The request reflects a broader frustration within the stressed-assets ecosystem: even when lenders have legal remedies in place, the pace of adjudication can dilute the value of those remedies. Asset reconstruction companies, which buy and manage distressed loans, depend heavily on timely tribunal action to preserve collateral value and improve eventual recoveries. When cases linger, assets can deteriorate, borrowers can restructure their positions, and lenders may recover less than expected.
Tribunal Capacity Gaps
A second major demand is the prompt filling of vacancies in Debt Recovery Tribunals. Industry participants argue that under-staffed tribunals are a structural bottleneck, adding to case backlogs and extending the time required for hearings, orders and enforcement. In a system where speed is often the difference between meaningful recovery and value erosion, vacant posts can have a direct financial cost for banks and asset reconstruction companies alike.
The call for more tribunal capacity also points to a wider challenge in India's insolvency and recovery architecture. While the country has built multiple legal pathways for dealing with bad loans, the effectiveness of those pathways depends on administrative efficiency. Without enough presiding officers and supporting staff, even strong laws can become slow-moving instruments. The industry's message is that procedural reform must be matched by institutional capacity if recovery is to improve in practice.
Sarfaesi Still Central
The companies have also underscored the importance of the Sarfaesi Act, describing it as an essential tool for banks in asset recovery. The law allows lenders to enforce security interests without first approaching civil courts, making it one of the most important mechanisms for dealing with defaulting borrowers. For banks and asset reconstruction companies, its value lies in the ability to act quickly against secured assets, particularly when delays can sharply reduce recoverable value.
The emphasis on Sarfaesi suggests that the industry sees the current recovery framework as fundamentally sound in design but uneven in execution. In their view, the problem is less the absence of legal authority and more the friction created by slow notices, repeated adjournments, tribunal vacancies and limited digital support. Better electronic services for litigation, they argue, would reduce paperwork, improve tracking and make the process more transparent for all parties.
For lenders, the stakes are significant. Faster recovery improves capital recycling, strengthens confidence in credit markets and reduces the drag of non-performing assets on the financial system. For asset reconstruction companies, a more efficient tribunal process would improve the economics of distressed-asset resolution and support more realistic bidding for bad loans.
The government's response will be closely watched by banks, ARCs and legal practitioners alike, especially as the financial sector continues to look for faster, more predictable ways to resolve stressed accounts. Any reform that shortens delays, improves notice delivery and restores tribunal capacity would likely be welcomed as a practical step toward making India's recovery framework more effective.