Mumbai: Asset reconstruction companies have sought government intervention to speed up debt recovery through the Debt Recovery Tribunals (DRTs) and the Sarfaesi mechanism, and proposed that interim stays be allowed to lapse automatically after two months unless specifically extended by the tribunal.

The Association of ARCs in India also urged the government to advise DRTs to avoid staying recovery proceedings without hearing both sides, ensure prior notice to secured creditors and impose appropriate pre-deposit conditions before hearing an appeal.

It sought filling of vacancies in DRTs within 15 days of them arising and the greater use of electronic services in litigation. It proposed allowing DRTs to rely on authenticated records maintained with National E-Governance Services Ltd as evidence of debt and default, besides penalties for frivolous litigation.

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The push comes as DRT and the Sarfaesi mechanisms helped banks recover ₹2.30 lakh crore during 2021-25, compared with ₹2.28 lakh crore recovered through the Insolvency and Bankruptcy Code during the same period, according to data compiled by the association.

The Sarfaesi Act empowers banks and financial institutions to take possession and auction collateral properties without judicial intervention to recover bad loans.

Association of ARCs in India chief executive Hari Hara Mishra said the 2002 Act created an enabling environment for banks to repossess charged assets. "Often it is viewed narrowly as a recovery tool only, but it is much more than that. It envisaged a set of dedicated specialised workout units called ARCs, created an instrument called security receipts to facilitate securitisation of stressed assets, again an innovation. Later on, it created a framework for CERSAI, a database for all mortgaged property across all states," he said. "At 25, Sarfaesi has its demographic dividend, and given the right direction can contribute much more to Viksit Bharat."