Table of ContentsIntroduction 3Non-performing assets 3Lok Adalats 3Debt Recovery Tribunals (DRT) 3SARFAESI Act 4Securitization Companies/Reconstruction Companies (SC/RC) 4Right of Lender 4Liability of Lender 4Borrower's Rights 5Borrowers' Responsibility 5Guidelines 6Impact 6Case Study 7 IntroductionBalance The balance of payments (BoP) crisis of the early 1990s proved to be a blessing in disguise, as it helped push through reforms aimed at first aligning India's economic policies, practices, laws, rules and institutions with global standards. Most of the reforms focused on the financial sector in general and on banks in particular. After much deliberation, the Narasimham Committee drew up a road map for reforms in the banking and financial sectors. Today there are defined ways to deal with NPAs of banks and financial institutions. However, before 1993, financial institutions had to resort to the lengthy legal route against defaulting borrowers, starting with filing complaints in court. It therefore took a long time in the legal process before the banks could have a chance of recovering their loans. On average, a civil court decision takes between 5 and 7 years. Non-performing assets An asset becomes non-performing when it ceases to generate income for the bank. In India, a non-performing asset (NPA) is broadly defined as an asset for which interest or principal repayment is overdue for more than 90 days. Lenders (banks) have three legal options for resolution of NPAs in India:• Lok Adalats• Debt Recovery Tribunals • SARFAESI ActLok AdalatsLok Adalat is an alternative dispute resolution system developed in India. The emphasis is on compromise and when n...... middle of paper ......ruble with this recovery system. It is true that the Bank is supposed to overcome the unfair approach of the borrower, but there is a law and if the borrower raises an important legal point, it must be taken into account. The right is always supported by logic, and the legal point or right raised by the borrower cannot be ignored without any reason. In this context, in recent times, even the High Courts which are strongly opposed to the Bank and the High Court are quashing the proceedings. of DRT or DRAT.ComplicationsFor the reasons mentioned above, it is most often difficult for borrowers to find the appropriate remedy against the Bank if there is a valid reason to challenge the Bank's action. Just because the lender (bank) says a particular thing against the borrower does not mean it can be an absolute truth. It all depends on the circumstances of the case.