The government may amend the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2003, to ensure that banks can issue notices to loan defaulters whose cases are pending with debt recovery tribunals.

"The matter will be referred to the law ministry for its comments and we will take a decision soon," A V Adsul, minister of state for finance, told Business Standard in New Delhi on Tuesday, after a meeting with bankers, representatives of debt recovery tribunals and debt recovery appellate tribunals.

The Debt Recovery Appellate Tribunal, Delhi, had recently passed a stay order in a case involving the Indian Overseas Bank and Krishan & Co and Others on the notice issued under the Securitisation Act.

Citing the decision, the Debt Recovery Tribunal, Delhi, had also stayed the proceedings under the new Act in a case involving Phoenix and IFCI. IFCI had been given 15 days to file a reply.

The matter was discussed in Tuesday's meeting convened by the finance ministry with bankers opposing the moves by the debt recovery tribunal and the debt recovery appellate tribunal. A solution could not be found.

Bankers also complained of a lack of recovery through tribunals. Quoting data circulated by the finance ministry, a bank chief said while cases involving Rs 133,000 crore (Rs 1,330 billion) had been filed in various tribunals, the recovery had been only Rs 6,700 crore (Rs 67 billion), though the tribunals had disposed off cases involving Rs 30,000 crore (Rs 300 billion).

"It was only because of the failure of the tribunals that the government had to come out with the Securitisation Act. However, even the Act has not been able to meet expectations," a bank chief added.

The tribunal representatives, on their part, however, said there were infrastructural bottlenecks, including lack of adequate manpower, which was impinging their performance.

"A number of issues were raised at the meeting and we will try to sort them out at the earliest," Adsul said.

Finance ministry officials said the government's move to set up tribunals were now bearing fruit and the recovery was improving year after year, while the number of pending cases had come down. They were, however, reluctant to disclose any data.