India’s Debt Recovery Tribunals were supposed to be the fast track for bank loan recoveries. Created under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, they were designed to resolve cases within 180 days. The actual median resolution time in 2025? Four years and seven months.

The numbers keep getting worse. As of December 2025, DRTs across India had a pending caseload of over 1,72,000 cases involving claims worth approximately ₹9.8 lakh crore. That’s nearly 10% of India’s GDP stuck in tribunal backlogs.

Why the System Is Clogged

Start with staffing. India has 39 DRTs and 5 Debt Recovery Appellate Tribunals (DRATs). At any given time, roughly a third of presiding officer positions are vacant. The Madras DRT has been operating with one presiding officer instead of the sanctioned three for the past 18 months. Cases get listed, adjourned, listed again, adjourned again.

Then there’s the adjournment culture. DRT proceedings follow essentially the same procedural code as civil courts, despite being designed as a faster alternative. Borrowers’ lawyers request adjournments for reasons ranging from “counsel not available” to “documents being compiled.” The absence of strict penalties for frivolous adjournments means they’re requested routinely and granted habitually.

The SARFAESI Act, 2002, was supposed to give banks a self-help remedy—seize the collateral without going to court. It works for secured loans with clear property titles. But when borrowers file applications under Section 17 challenging the seizure action, those challenges land in the DRT system and get stuck in the same backlog.

The Real Cost to Banks

Banks don’t just lose the principal when NPAs drag through tribunals for years. They lose the time value of that money, they pay legal fees, they maintain provisions on their books, and they deal with the administrative overhead of managing thousands of open recovery proceedings.

Public sector banks are disproportionately affected. SBI alone has over 15,000 cases pending in DRTs. Punjab National Bank has around 8,000. These banks employ armies of panel lawyers across the country, paying legal fees that run into hundreds of crores annually—often for cases where recovery, when it eventually happens, amounts to 15-25 paise per rupee of the original claim.

Private banks have partially sidestepped the problem by being more aggressive with SARFAESI enforcement and by using the Insolvency and Bankruptcy Code (IBC) for larger exposures. But the IBC has its own problems—NCLT benches are overloaded too, and the average resolution time has stretched well beyond the original 330-day target.

The IBC Hasn’t Solved the Problem

The IBC was launched in 2016 as a comprehensive insolvency framework that would make DRTs somewhat less critical. For large corporate defaults, it’s worked reasonably well—recovery rates through IBC resolution plans have averaged around 32%, which is better than what DRTs deliver.

But the IBC was never designed for the bread-and-butter DRT caseload: small and mid-size defaults between ₹10 lakh and ₹10 crore. These cases are too small for the NCLT’s corporate insolvency process and too large for the individual insolvency provisions, which were notified late and remain barely functional.

The result is a gap. Banks with portfolios of small commercial NPAs—think SME loans, small trader financing, professional loans—have no effective recovery mechanism other than DRTs or SARFAESI. And both are slow.

Technology Could Help, But Hasn’t

E-filing was introduced in DRTs in 2020, but implementation has been inconsistent. Some tribunals have functioning e-filing systems. Others still require physical filing with a digital copy uploaded afterwards (defeating the purpose). Video hearings, which became common during COVID, have been scaled back in most DRTs despite improving access for parties in remote locations.

Case management systems that could prioritise cases by age, value, and complexity exist in theory but aren’t being used effectively. Most presiding officers list cases based on whatever their staff pulls from the physical register each week, which means old cases keep getting pushed back as new filings pile up.

The technology gaps here aren’t about capability. Banks are increasingly using AI-driven analytics for loan monitoring and early NPA identification—firms like an AI consultancy work with financial institutions on predictive models that flag potential defaults months before they materialise. But the tribunal system itself is stuck in an analogue workflow that no amount of bank-side technology can compensate for.

What Needs to Change

The Law Commission, various RBI committees, and banking industry bodies have all recommended reforms. The common themes are:

Increase the number of DRTs and fill vacancies. India needs at least 60 functioning tribunals to handle the current caseload, and every presiding officer position should be filled within 90 days of a vacancy.

Impose strict limits on adjournments. Two adjournments per party, maximum. After that, the case proceeds regardless. This single change would probably cut resolution times by 40%.

Create a small-claims track for defaults under ₹1 crore with simplified procedures and a 120-day resolution target. Most of these cases are straightforward—the borrower defaulted, the security exists, the question is just enforcement.

Mandate electronic case management with automated priority scheduling. Cases older than two years should automatically get priority listing.

The Uncomfortable Reality

None of these reforms are technically difficult. They don’t require new legislation (except possibly for the small-claims track). They need administrative will and funding, both of which have been consistently absent.

The banking sector has adapted by building higher provisions into their loan pricing, which means borrowers pay more because the recovery system doesn’t work. It’s a hidden tax on credit, borne by the productive economy, caused by institutional dysfunction.

Until DRT reform becomes a genuine priority rather than a recurring recommendation in committee reports, banks will continue to price in the cost of broken recovery mechanisms. And India’s credit culture—where defaulting on a bank loan carries insufficient consequences—will persist.