Asset reconstruction companies have pressed the government for a sharper administrative push to accelerate debt recovery, saying the current pace of proceedings before Debt Recovery Tribunals is slowing the resolution of distressed loans and weakening enforcement under India's asset recovery framework.
The industry's appeal comes at a time when lenders continue to rely on legal recovery channels to extract value from stressed accounts, particularly where borrowers contest enforcement actions or seek repeated adjournments. ARCs have argued that procedural delays, rather than the absence of legal remedies, are now one of the biggest bottlenecks in the recovery chain. They have specifically sought changes that would make interim judicial relief time-bound, improve notice delivery to creditors, and reduce the backlog that has built up in the tribunal system.
Tribunal Delays Mount
At the centre of the demand is a proposal that interim stays granted in recovery matters should lapse automatically after two months unless extended through a reasoned order. According to the industry's view, open-ended stays often freeze recovery action for long periods, allowing asset values to erode and reducing the eventual realisation for lenders and investors. ARCs contend that a strict time limit would preserve the balance between borrower rights and creditor enforcement, while preventing procedural relief from becoming a de facto shield against recovery.
The companies have also called for better notification processes for creditors, saying that delays or deficiencies in service of notices can derail hearings and prolong disputes. In their assessment, more reliable communication would help reduce avoidable adjournments and improve the efficiency of tribunal proceedings. The request reflects a broader frustration within the stressed-assets ecosystem, where even strong legal claims can become trapped in procedural bottlenecks.
Sarfaesi Remains Central
The Sarfaesi Act remains the cornerstone of the recovery architecture for banks and ARCs, enabling secured creditors to enforce claims without first approaching civil courts in many cases. Industry participants have repeatedly described it as an essential tool for asset recovery, particularly in cases involving non-performing assets where speed is critical to preserving collateral value. But they say the effectiveness of the law depends heavily on the supporting machinery around it, including tribunal capacity, digital filing systems and timely adjudication.
The call for reform is therefore not a challenge to the statutory framework itself, but an argument that the enforcement ecosystem must be made more functional. ARCs are effectively seeking a faster, more predictable pathway from enforcement notice to recovery outcome. In a market where distressed debt pricing depends on expected recoveries, even modest delays can materially affect returns and discourage fresh capital from entering the sector.
Capacity And Digitisation
Another major concern raised by the industry is the shortage of personnel at Debt Recovery Tribunals. ARCs have urged the government to fill vacancies promptly, warning that understaffed tribunals cannot keep pace with the volume and complexity of cases flowing through the system. In practical terms, vacant posts can translate into longer waiting periods, slower listing of matters and reduced throughput, all of which add friction to an already stretched process.
The companies have also sought stronger electronic services for litigation, including better digital filing, case tracking and online communication. The push for digitisation is aimed at reducing dependency on physical appearances and paper-based processes, which often add time and cost to recovery proceedings. For lenders and ARCs handling portfolios across multiple jurisdictions, improved e-services could make enforcement more consistent and easier to monitor.
The broader message from the sector is clear: India's recovery framework has the legal tools it needs, but those tools are not always operating at full speed. With stressed assets still an important feature of the banking landscape, ARCs are urging policymakers to focus on execution rather than legislation alone. Their argument is that quicker, cleaner recovery processes would strengthen lender confidence, improve asset pricing and support the wider credit system by ensuring that default does not become a long-term administrative stalemate.