Recovery of dues to the banks and financial institution act, 1993

The act of Recovery of the dues due to banks and financial institutions, 1993 made through the recovery of the dues from the bank and other financial intuitions in the Indian parliament.

Banks and financial institutions intended Indian Parliament to induct an interest protection act for the institutions, when they faced the problem of stuck funds or the repayment of loans. At the time of repayment is when Endowments were habitually held back. To resolve these matters Setting of special tribunals became important because getting your dues recovered was getting troublesome.

These laws were initiated to keep business flow intact or maintaining an easy mechanism for Fair play of dues, this results to the establishment of the tribunals and appellate tribunals.

Short title

The act is enacted as follows:

a) Due to banks and financial institution act, 1993, this act should be known as the Act of Recovery of Dues

b) This act extends to every part of India,

c) It does not apply to the amount of fewer than 10 lakhs.

Establishment of the tribunal

Tribunal to administrate the cases for recovery of the dues to the bank and the financial institutions and to exercise the jurisdiction too. The area is also determined before entertaining any case of the recovery of the dues.

Debt recovery tribunal

Section 3 enables the establishment of the Debt recovery tribunal, from the RDDBFI, which provides them with the authority of exercising of the power and the jurisdiction.

Who recovers their debts under the RDDBFI ACT?

The amount of the recovery of the dues due to the bank and financial institution should not be less than the 10 lakhs as per section 1(4), even though in some cases it may come to 1 lakh also.

The types of debt that can be recovered under the RDDBFI ACT?

Debt is any due that is comprehensive of interest according to section 2(g), which is claimed by the banks or the financial institutions. These types of amounts are recoverable by the banks and financial institutions on the date of application whether payable in order of the court for arbitration or the mortgage.

Before taking the case to the tribunal the authorities give a notice of 90 days.

Powers and jurisdiction of the RDDBFI act and DRT

The power is the hands of the DRT to govern the administration and decide the applications of the banks and the financial institutions Under the RDDBFI act, DRT can  convey the matter from one tribunal to other also.Section 18 conducts the control of any civil court or the duty of recovery of dues due to the banks and financial institutions apart from the Supreme Court and high court.


1) The Original petition

2) An Interlocutory petition

3) A Written statement

Application to be filed

under the Act section 19 (1) an application needs to be filed in the local jurisdiction, where:

a) The cause of action arose

b) The bank and the financial institution reside there

c) The defendant voluntarily resides there and runs a business

Content of application

a) To prove the claim made by the banks and financial institutions an evidence is required.

b) The security retained through property and assets is estimated.

c) A request must be made by the debtor for uncovering his other assets and properties in case the value of assets is not enough to fulfil the debt.


There is a fee that is required to be paid with the application

A) Under section 19 (1) and 19 (2) of the Act.

  • 10 lakh the fine is Rs/-12,000 if the amount is Rs and if the amount is above than Rs/- 10 lakh.
  •  The fine is Rs/- 12,000 plus Rs/- 1,000 per every lakh, subject to a maximum of Rs/- 150,000.

B) In the case of counterclaim application.

  • order Rs/- 125 against an interim

 It can be filed under any registrar or any other officer of the DRT authorised by the registrar after the completion of the conventionalities of the application.

Summon of the notice

A summon of the notice issued by the registrar of the DRT or any other presiding officer, which will be served to the defendant or the respondent.

The courier sent a notice to the respondent and if she/ he deliberately ignores the summon then it is published in the newspaper. It is known as substitute service.

Hearing of the case

Within one month of getting the notice or the summon the respondent needs to send a reply, whereby the case is proceeded by the jurisdiction of DRT and the orders are given.

Recovery certification by DRT

The officer gives the final decision after the hearing both sides and within 15 days, it is passed to the recovery officer that ensure the speedy recovery of the debt.

Recovery by the Recovery officer

a) The property of the debtor and all their assets are seized.

b) The security provided at the time of taking a loan is taken.

c)The defender/ respondent is arrested.

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