A bank wishes to file an application for recovery of debts against an MSME borrower....

Question

A bank wishes to file an application for recovery of debts against an MSME borrower. Under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), what is the minimum debt amount required to approach the Debt Recovery Tribunal (DRT)?

Bank Promotion Exam Guide · Accepted Answer

Correct Answer: B - Direct Answer: ₹20 Lakh. Concept Definition: DRTs are special tribunals established to facilitate the recovery of debt due to banks and financial institutions. Structural Limit: Jurisdiction: Banks can file an Original Application (OA) in the DRT only if the total debt due is ₹20 Lakh or more. Scenario for < ₹20 Lakh: For debts below ₹20 Lakh, banks must use Civil Courts or Lok Adalats (for smaller amounts up to ₹20 Lakh). Causal Reasoning: This threshold was raised (previously ₹10 Lakh) to reduce the backlog of cases in DRTs and focus the tribunal's resources on higher-value recovery cases.

Bank Promotion Exam Guide

Q101: A bank wishes to file an application for recovery of debts against an MSME borrower. Under the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act), what is the minimum debt amount required to approach the Debt Recovery Tribunal (DRT)?

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