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Lok Adalat

Lok Adalats provide a mechanism for settlement of loan disputes through compromise rather than lengthy legal proceedings. Key aspects include: 1) Lok Adalats have jurisdiction to determine settlements between parties and arrive at compromises for disputes over loan accounts classified as NPA. 2) Composition includes retired judges, judicial officers, legal professionals, and social workers to act as conciliators. 3) Settlements carry the weight of civil court decrees and are binding, with no right to appeal. 4) SRFS can offer concessions like waiver of penal interest or partial interest to incentivize borrowers to settle disputes through Lok Adalat.

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G S Ravindra
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603 views18 pages

Lok Adalat

Lok Adalats provide a mechanism for settlement of loan disputes through compromise rather than lengthy legal proceedings. Key aspects include: 1) Lok Adalats have jurisdiction to determine settlements between parties and arrive at compromises for disputes over loan accounts classified as NPA. 2) Composition includes retired judges, judicial officers, legal professionals, and social workers to act as conciliators. 3) Settlements carry the weight of civil court decrees and are binding, with no right to appeal. 4) SRFS can offer concessions like waiver of penal interest or partial interest to incentivize borrowers to settle disputes through Lok Adalat.

Uploaded by

G S Ravindra
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

SETTLEMENT THROUGH

LOK ADALAT

G S Ravindra
SRFS
Why Loan accounts go bad ?
BORROWER-SIDE SRFS – SIDE
Lack of Planning Defective Sanction
Diversion of Funds Wrong assessment of
Disputes within cash flow
No contribution No pre / post-sanction
Natural Calamities supervision, etc
Delay in releases
IMPACT OF NPA
INCOME / PROFITABILITY
COST OF FUNDS
CREDIBILITY
Available options
Identify
Rehabilitation Arrest slippage
Restructure

Legal Action

Write off
RECOVERY-METHODS
Non legal methods for recovery of problem
loans
Reminder System
Visit to borrower
Rephasement/Rescheduling
Recovery camps
Lok Adalat
LOK ADALATS
Similar to a civil court. Created under
Legal Services Authority Act 1987.
Can be organised by the State / District /
Taluk level Legal Services Authorities.
SC / HC legal services Committee
Can be held at any time intervals and
places as deemed appropriate. It is an
ongoing process.
LOK ADALATS Contd…

Cases dealt
Parties to the dispute agree to refer the dispute
to LA
One of the parties approaches LA and there is a
chance for settlement
LA has jurisdiction to determine and arrive at a
compromise / settlement between the parties to
the dispute
LA can send summons, take evidence and
determine court procedures.
Composition of Lok Adalat
Sec. 19
Central, State, District and Taluka legal
Services Authority has been created
Conciliators for Lok Adalat Comprise
Sitting or retired judge of the high court
Serving or retired judicial officer
Member of the legal profession
Social worker
Sec 20
Cases can be referred for consideration
By consent of both the parties to the dispute
One of the party makes an application
Court is satisfied to take cognizance
Compromise settlement
Sec. 21
Every award of Lok Adalat shall be
deemed as decree of Civil court
Every award made shall be final and
binding on all parties
No appeal shall lie from the award
Sec. 22
Every proceedings of the Lok Adalat shall
be deemed to be judicial proceedings for
the purpose of
Summoning of Witnesses
Discovery of documents
Reception of evidences
Requisitioning of Public record
LOK ADALATS-RBI GUIDELINES
Cases involving an amount upto Rs.20 lacs may be
referred
All NPA accounts which are in Doubtful / Loss category
Official representing should have sufficient powers
worked out within the compromise policy
Decree should be sought from the LA for the settlement
amount. Repayment period should be within 1-3 years.
After full payment of this amount, discharge certificate
should be issued.
AWARDS OF LOK ADALAT
In the form of consent decrees.
No appeal lies against such awards and is
binding on all parties
Negotiation Process
Preparation What SRFS want

Debate What Borrower want

Proposition SRFS can trade

Bargain What will SRFS trade


Ground work
Ensure that it is beneficial to the SRFS.
Depending on the case, we can extend
concession on the following
Keep ready penal interest charged . In the court
offer for waiver, either in full or part, of penal
interest, if charged.
Offer for Partial or complete waiver of interest
charged / accrued after the account is classified
as NPA.
Offer for complete or partial waiver of interest
Accounting entries
Current Outstanding xxxx
Add Interest xxxx
Legal charges xxxx
Total dues xxxx
Less Recoveries xxxx
Lok Adalat offer xxxx
Net Loss xxxx
Of which Write off xxx
Waiver xxx
BENEFITS
Quick recovery of funds locked up in NPAs
No additional cost to SRFS for recovery
process and release of provisions held
against such NPAs.
Improvement in profitability.
BENEFITS
No court fee and even the case is filed in
the regular court, the fee paid will be
reimbursed if the case is settled
No strict application of the Procedural
Laws and the Evidence Act while
assessing the merits of the claim
Disputes can be brought to LA directly
instead of going to a regular court

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