Debts Recovery Tribunal (DRT): How Banks Recover Large Debts
Debts of ₹20 lakh or more go to a special tribunal, not a civil court. Here is how a case moves.
A Debts Recovery Tribunal (DRT) is a special tribunal that hears banks' and financial institutions' cases for recovering large debts. It was set up under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, now called the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act).
The idea was speed. Ordinary civil courts were slow, so loan recovery cases above a minimum amount go to the DRT instead. Appeals from a DRT go to a Debts Recovery Appellate Tribunal (DRAT).
You save ₹200
- Full 100-question mocks
- Recovery law coverage
- Module-wise practice
One payment, no subscription · Valid for 2 months
The ₹20 Lakh Rule
The RDB Act does not apply when the debt due is less than ₹20 lakh. The Act itself set ₹10 lakh; the Central Government raised it to ₹20 lakh by notification dated 6 September 2018. So a bank chasing ₹35 lakh on a business loan can go to the DRT, but a ₹3 lakh personal loan goes to a civil court or a Lok Adalat.
How a Bank's Case Moves Through the DRT
- 1
Bank files an application
The bank or financial institution files an application under section 19 of the RDB Act, stating the debt and attaching its documents.
- 2
Borrower files a defence
The borrower (the defendant) must file a written statement of defence within 30 days of receiving the summons.
- 3
Hearing and final order
The Act asks the DRT to try to finish in two hearings and to dispose of the application within 180 days of receiving it.
- 4
Recovery certificate
If the DRT finds the debt is due, it issues a recovery certificate for the amount, which goes to the Recovery Officer.
- 5
Recovery Officer recovers the amount
Section 25 lets the Recovery Officer attach and sell the borrower's movable or immovable property, take possession of secured or other property and appoint a receiver to sell it, appoint a receiver to manage property, or order arrest and detention in prison.
Words Used in DRT Cases
- Applicant
- The bank or financial institution that files the recovery case.
- Defendant
- The borrower or guarantor the case is filed against.
- Presiding Officer
- The judge who heads the DRT.
- Recovery certificate
- The DRT's certificate of the amount due. It works like a decree and is enforced by the Recovery Officer.
- Recovery Officer
- The DRT officer who executes the recovery certificate.
- DRAT
- Debts Recovery Appellate Tribunal, which hears appeals against DRT orders.
Quick practice on banking basics. No signup.
Appeal to the DRAT
| Rule | What the RDB Act says |
|---|---|
| Time limit | Within 30 days of receiving the DRT order (late appeals only for sufficient cause) |
| Pre-deposit by borrower | 50% of the debt as decided by the DRT; DRAT can reduce it to not less than 25% |
| Consent orders | No appeal lies against an order made with the consent of both parties |
| DRAT's target | Try to dispose of the appeal within six months |
The DRT's Other Jobs
- check_circleSARFAESI complaints: under section 17 of the SARFAESI Act, a borrower can challenge possession or sale before the DRT within 45 days.
- check_circleSARFAESI shortfall: if selling the security does not clear the dues, the bank can apply to the DRT for the balance under section 13(10).
- check_circleIndividual insolvency: the Insolvency and Bankruptcy Code names the DRT as the adjudicating authority for individuals and partnership firms.
- check_circleNo civil court can hear the matters the DRT handles (section 18), except the Supreme Court and High Courts under their constitutional powers.
How the DRA Exam Tests This
Questions usually test the threshold (₹20 lakh, not ₹10 lakh), the law (RDB Act, 1993), the appeal forum (DRAT) and the pre-deposit for appeal. The trap is the old ₹10 lakh figure, which still appears in older study material. The Act's own text says ₹10 lakh, but the 2018 notification replaced it.
A second trap is mixing up deposits: an appeal to DRAT against a DRT order under the RDB Act and an appeal against a SARFAESI order both need 50% (reducible to 25%), but they are under different sections and different Acts.
FAQs
What is the minimum amount for a DRT case?expand_more
₹20 lakh. The RDB Act does not apply to debts below that amount, following the Central Government's notification of 6 September 2018.
Can the DRT send a loan defaulter to jail?expand_more
Arrest and detention in prison is one of the modes of recovery the Recovery Officer can use under section 25 of the RDB Act, alongside attachment and sale of property and appointing a receiver.
How long does the DRT take to decide a case?expand_more
The Act asks the DRT to dispose of an application within 180 days of receiving it. In practice cases can take longer.
Can I appeal against a DRT order?expand_more
Yes, to the DRAT within 30 days of receiving the order. A borrower must first deposit 50% of the debt as decided by the DRT, which the DRAT can reduce to 25%.
Next steps
Take a full IIBF DRA mock test100 questions, 2 hours, scored instantly.