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| Debt recovery regime rapidly progressing: Fitch |
| Press Trust of India / Mumbai Aug 31, 2010, 21:53 IST |
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The country's insolvency regime -- the legal framework that helps a lender safely recover dues from a defaulter -- has shown steady progress since the past few years with the duration of the recovery process getting more than halved -- from nearly seven years to two to three years, says a Fitch Ratings India report.
According to the report, a set of enabling landmark legislation has seen the country getting some statutory forums for the lenders to approach various redressal avenues like the debt recovery appellate tribunals (formed after the DRT Act of 1993), Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act of 2002) courts or the age-old BIFR.
A better insolvency regime not only helps lenders trim their bad loans but also help improve the perception of the global investor community towards country.
According to the report, there has been a 30-50 per cent improvement in the recovery process through DRTs since the early 2004. However, even now, the BIFR still has a long way to go.
"Enforcement of security interest has seen improvements, particularly those through the use of debt recovery tribunals and provisions of the Sarfaesi Act. The recovery amounts have ranged between 30 and 50 per cent. But the time to recovery has dropped from seven years to two to three years in recent times," Fitch India's structured finance analyst Amit More said while releasing the report here today.
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