NPA: DRT Court – A Devil’s Advocate?

In today’s complex financial environment, the rising burden of Non-Performing Assets (NPAs) has placed borrowers and lenders at a crossroads. For many business owners, the Debt Recovery Tribunal (DRT)—meant to expedite loan recovery—often becomes a hostile arena, where the emphasis is more on confrontation than resolution. It has, in many cases, earned the reputation of being more of a devil’s advocate than a platform for fair redressal. At Victor’s Group, we emphasize a structured, preventive, and professionally guided approach to NPA management—aimed at turning around distressed assets and avoiding adversarial litigation.

Based on the findings, a well-devised restructuring proposal is developed. This may involve rescheduling of payments, interest rate renegotiation, one-time settlement (OTS), debt-equity conversion, or infusion of new capital. The goal is to preserve business value while aligning the solution with the lender’s risk appetite. The approval process must be time-bound and transparent, involving internal committees, legal counsel, and lender concurrence to ensure clarity and speed.

Proper documentation is the cornerstone of any restructuring exercise. Revised loan agreements, security restructuring, resolution plans, and board approvals must be meticulously recorded to avoid ambiguity or future disputes. Post-restructuring, consistent monitoring and reporting mechanisms are vital. Monthly MIS reports, financial health checks, and site visits ensure that the borrower remains on track and any deviations are addressed swiftly.

Equally critical is compliance and regulatory adherence. All actions must align with RBI guidelines, SEBI disclosures, and insolvency codes to ensure regulatory protection. Furthermore, proper asset valuation and forensic due diligence help maintain transparency and lender confidence, especially in high-value or contentious accounts. This adds another layer of credibility, often influencing the outcome if the matter reaches a legal forum.

A well-orchestrated client communication strategy ensures alignment across all stakeholders—borrowers, lenders, investors, and advisors. Timely, clear, and professional communication builds trust and reduces friction. In addition, legal preparedness should not be overlooked; having pre-approved legal strategies and documentation ensures a defensive stance if proceedings escalate.

In conclusion, while DRTs serve a legal function, they should not be the default solution. Proactive NPA management, professional advisory, and stakeholder collaboration can turn potential court cases into revival success stories. At Victor’s Group, we believe that business deserves a second chance—without letting the courtroom decide its future.