Asset reconstruction companies have sought stronger government intervention to accelerate debt recovery, arguing that the current pace of proceedings before Debt Recovery Tribunals is undermining the effectiveness of India's stressed-asset resolution framework. The industry's message is straightforward: recovery tools exist, but procedural delays, vacant benches and weak service of notices are slowing enforcement at a time when lenders need faster resolution.
Recovery Bottlenecks
The companies have urged reforms that would make tribunal-led recovery more time-bound and predictable. Among the key suggestions is that interim stays granted in recovery matters should lapse automatically after two months unless specifically extended by a reasoned order. The proposal is aimed at preventing borrowers from using interim relief as a prolonged shield against enforcement, a problem that lenders say often stretches cases far beyond their intended timeline.
They have also called for better notification processes for creditors, saying that delays or gaps in service can derail hearings and prolong litigation. In a system where time is central to asset value, even administrative lapses can reduce the chances of meaningful recovery. For asset reconstruction companies, which buy distressed loans and work to recover value through legal and negotiated routes, every month of delay can erode the economics of a case.
Tribunal Capacity Gap
A second major concern is the shortage of functioning Debt Recovery Tribunal capacity. The companies have asked the government to fill vacancies in DRTs on a priority basis, arguing that understaffed tribunals are a structural bottleneck in the recovery chain. When benches are short of presiding officers or support staff, hearings are adjourned, orders are delayed and enforcement momentum is lost.
The call for faster appointments comes at a time when India's banking system continues to rely on specialized recovery forums to resolve legacy stressed assets. DRTs were designed to provide a faster route than ordinary civil courts, but industry participants say the original intent is being diluted by backlogs and administrative delays. The result is a slower conversion of legal rights into recoverable cash flows, which in turn affects lenders' balance sheets and the broader credit cycle.
The companies have also sought enhanced electronic services for litigation, including better digital filing, case tracking and communication systems. Industry executives argue that digitisation can reduce friction in recovery proceedings by improving transparency, lowering compliance delays and making it easier for creditors to monitor case progress. In a sector that increasingly depends on data-driven asset management, the absence of robust e-services is seen as an avoidable drag.
Sarfaesi Still Central
The Sarfaesi Act remains at the centre of the recovery debate. Asset reconstruction companies have described it as an essential tool for banks in asset recovery, particularly because it allows lenders to enforce security interests without first going through lengthy civil litigation. The law is widely viewed as one of the most important pillars of India's distressed-asset architecture, alongside insolvency and tribunal-based recovery mechanisms.
However, the effectiveness of Sarfaesi depends heavily on the speed and reliability of the supporting legal process. If interim stays linger, notices are delayed or tribunals remain understaffed, the practical value of the law is reduced. That is why the industry's appeal is not for a new framework, but for a more efficient one.
The broader policy question is whether India's recovery system can keep pace with the scale and complexity of stressed assets in the banking sector. For lenders, faster recovery improves capital recycling and reduces provisioning pressure. For asset reconstruction companies, it improves the viability of distressed-asset purchases. And for the financial system, it strengthens credit discipline by ensuring that default carries real consequences.
The latest push from ARCs suggests that the industry now wants the government to focus less on expanding the legal toolkit and more on making the existing one work faster. In a recovery environment where delay often equals loss, procedural reform may prove as important as substantive law.