When a borrower stops paying, four very different legal roads open up — a specialised tribunal, a security-enforcement fast-track, a full insolvency process, or a conciliation forum. Covers the DRT Act 1993, SARFAESI Act, Insolvency and Bankruptcy Code, Legal Services Authorities Act (Lok Adalat), and the Law of Limitation, with 50 exam-style MCQs with hidden answers.
📅 Updated: September 2026 • 34 min read
📊 At a Glance
Law
Core Mechanism
DRT Act, 1993
Specialised tribunal (DRT) for bank/FI debt recovery above ₹20 lakh
SARFAESI Act
Enforce security interest without court intervention (Sec 13(2)/13(4))
IBC
Time-bound insolvency resolution (CIRP) or liquidation
1 Recovery of Debts and Bankruptcy Act, 1993 (DRT)
⚖️
Specialised Tribunals for Bank Debt Recovery
The Recovery of Debts and Bankruptcy Act, 1993 established Debt Recovery Tribunals (DRTs) as specialised forums for banks/financial institutions to recover debts of ₹20 lakh and above, bypassing the slower ordinary civil court process. An aggrieved party can appeal a DRT order to the Debt Recovery Appellate Tribunal (DRAT). DRTs were India's first dedicated institutional response to the mounting NPA problem, predating SARFAESI by nearly a decade.
2 SARFAESI Act
2002The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is enacted, giving secured creditors the power to enforce security WITHOUT court intervention — a landmark departure from the slow civil-suit route.
PresentSARFAESI remains the primary fast-track recovery mechanism for secured NPA accounts, alongside IBC for insolvency-stage resolution.
📜
Section 13(2) Notice
On default and NPA classification, the secured creditor issues a 60-day demand notice calling on the borrower to discharge dues in full.
🔒
Section 13(4) — Possession & Sale
If the borrower fails to repay within 60 days, the creditor may take possession of the secured asset and sell it (auction) to recover dues, without approaching a court.
⚖️
Borrower's Recourse — DRT/DRAT
A borrower aggrieved by SARFAESI action can appeal to the DRT (under Section 17), and further to the DRAT — but only after a security interest has actually been enforced, not to pre-emptively stall the process.
🚫
Exclusions
SARFAESI does NOT apply to security interests created on agricultural land, or where the outstanding amount is below the prescribed threshold, among other exclusions.
💡
Memory Trick: "60 Days, Then Seize"
SARFAESI's Section 13(2) notice gives 60 days; only after that window lapses unpaid can the bank invoke Section 13(4) to take possession and sell — a sequential, not simultaneous, process.
3 Insolvency and Bankruptcy Code (IBC)
📅
2016 Enactment
The IBC consolidated India's fragmented insolvency framework into a single, time-bound code covering companies, LLPs, partnerships, and individuals.
🔄
Corporate Insolvency Resolution Process (CIRP)
Initiated by a financial/operational creditor or the corporate debtor itself before the NCLT (National Company Law Tribunal); a Resolution Professional takes over management, and creditors (via a Committee of Creditors) approve a resolution plan within a time-bound period (originally 180+90 days, with further extensions permitted by courts).
⚰️
Liquidation
If no resolution plan is approved within the timeline, the corporate debtor moves to liquidation, with proceeds distributed per the IBC's "waterfall" priority (secured creditors, workmen's dues, etc.).
🎯
Moratorium
On CIRP admission, a moratorium prohibits new/continuing legal proceedings against the corporate debtor, freezing recovery actions while resolution is attempted.
Unlike SARFAESI (which lets a secured creditor act unilaterally against its own security), IBC is a collective process — all creditors participate, and the outcome binds even dissenting creditors once approved.
4 Legal Services Authorities Act — Lok Adalat
What it is: The Legal Services Authorities Act, 1987 established Lok Adalats ("People's Courts") as an alternative, conciliatory dispute-resolution forum. For banks, Lok Adalats are particularly used to settle small-value NPA accounts (typically retail/small loans) through mutual compromise, with the settlement having the same legal force as a civil court decree, and NO appeal lies against it.
Lok Adalats offer banks a low-cost, quick settlement route for accounts too small to justify the cost/time of DRT or SARFAESI proceedings.
5 Law of Limitation
⏳
3 Years to Act, or Lose the Right
The Limitation Act, 1963 prescribes a period (generally 3 years from the date of default/last acknowledgment) within which a creditor must initiate legal action to recover a debt; after this window lapses, the debt becomes time-barred — unenforceable through legal process (though not extinguished as a moral obligation). Banks obtain periodic acknowledgment of debt from borrowers (a signed confirmation of the outstanding balance) to reset the limitation clock and keep their legal recovery options alive.
6 Choosing the Right Recovery Route
Scenario
Typical Route
Large secured NPA, security readily saleable
SARFAESI Act
Debt above ₹20 lakh, unsecured/complex dispute
DRT (Recovery of Debts and Bankruptcy Act)
Borrower insolvent, multiple creditors involved
IBC (CIRP)
Small-value retail NPA, amenable to compromise
Lok Adalat
✓ Key Takeaways
The DRT Act, 1993 created specialised tribunals (DRT/DRAT) for bank debt recovery of ₹20 lakh and above.
SARFAESI (2002) lets secured creditors enforce security without court intervention via a 60-day Section 13(2) notice followed by Section 13(4) possession/sale.
The IBC (2016) offers a time-bound, collective insolvency process (CIRP) via the NCLT, with a moratorium and liquidation as a fallback.
Lok Adalats under the Legal Services Authorities Act settle small-value NPAs via compromise, with awards carrying civil-decree force and no appeal.
The Law of Limitation gives creditors a 3-year window to act, reset by periodic acknowledgment of debt.
📝 Top 50 JAIIB-Style MCQs on Recovery of Dues
Test your understanding with these 50 practice MCQs, closely modelled on the JAIIB (PPB) exam pattern. Each question has 5 options — the correct answer is hidden by default; tap "Show Answer" to reveal it along with a short explanation.
⚖️ DRT Act, 1993
1 DRTs were established under the:
A. Recovery of Debts and Bankruptcy Act, 1993
B. SARFAESI Act, 2002
C. IBC, 2016
D. RBI Act, 1934
E. Companies Act, 2013
Answer: A. DRTs were established under the 1993 Act.
2 DRTs handle bank/FI debt recovery for amounts:
A. ₹20 lakh and above
B. Below ₹1,000 only
C. No minimum threshold applies
D. Only above ₹100 crore
E. Exactly ₹1 lakh, no more no less
Answer: A. DRTs handle debts of ₹20 lakh and above.
3 An appeal against a DRT order lies with:
A. The Debt Recovery Appellate Tribunal (DRAT)
B. The Supreme Court directly, bypassing all else
C. No appeal is possible
D. The NCLT
E. RBI
Answer: A. DRAT hears appeals against DRT orders.
🔒 SARFAESI Act
4 SARFAESI Act was enacted in:
A. 2002
B. 1993
C. 2016
D. 1987
E. 1934
Answer: A. SARFAESI Act was enacted in 2002.
5 SARFAESI's key feature is that it allows secured creditors to enforce security:
A. Without court intervention
B. Only through a lengthy civil suit
C. Only with the borrower's written consent
D. Only after criminal conviction of the borrower
E. Never; SARFAESI prohibits enforcement entirely
Answer: A. SARFAESI enables enforcement without court intervention.
6 Under Section 13(2), a secured creditor issues a demand notice giving the borrower:
A. 60 days to discharge dues in full
B. 1 day only
C. 10 years
D. No time at all; possession is immediate
E. 6 hours
Answer: A. Section 13(2) gives borrowers 60 days.
7 Section 13(4) of SARFAESI allows the creditor to:
A. Take possession of the secured asset and sell it
B. Imprison the borrower directly
C. Seize unrelated third-party assets with no connection to the security
D. Cancel the borrower's citizenship
E. Waive the debt automatically
Answer: A. Section 13(4) allows possession and sale of the secured asset.
8 A borrower aggrieved by SARFAESI action can appeal to:
A. The DRT under Section 17
B. No forum exists for appeal
C. Only the local police station
D. The Ministry of Finance directly
E. A Lok Adalat exclusively
Answer: A. A SARFAESI appeal under Section 17 goes to the DRT.
9 SARFAESI generally does NOT apply to security interest created on:
A. Agricultural land
B. Commercial office space
C. Residential apartments
D. Gold ornaments
E. Listed shares
Answer: A. Agricultural land is generally excluded from SARFAESI.
🔄 IBC
10 The Insolvency and Bankruptcy Code was enacted in:
A. 2016
B. 1993
C. 2002
D. 1987
E. 1934
Answer: A. IBC was enacted in 2016.
11 CIRP under the IBC is initiated before:
A. The National Company Law Tribunal (NCLT)
B. A Lok Adalat
C. The DRT exclusively
D. RBI directly
E. The Supreme Court, as the first forum
Answer: A. CIRP proceedings go before the NCLT.
12 During CIRP, a "moratorium" means:
A. New/continuing legal proceedings against the corporate debtor are prohibited
B. All debts are automatically written off immediately
C. The company is instantly liquidated
D. Creditors lose all rights permanently
E. No effect on any legal proceedings
Answer: A. A moratorium freezes new/continuing legal proceedings during CIRP.
13 Who takes over management of the corporate debtor during CIRP?
A. A Resolution Professional
B. The original promoters, unchanged
C. RBI directly
D. A Lok Adalat judge
E. No one; management continues unchanged
Answer: A. A Resolution Professional manages the debtor during CIRP.
14 If no resolution plan is approved within the IBC timeline, the corporate debtor typically moves to:
A. Liquidation
B. Automatic debt forgiveness
C. A permanent moratorium with no further action
D. Immediate return to promoters with full debt waiver
E. Conversion into a public sector company
Answer: A. No approved plan leads to liquidation.
15 Unlike SARFAESI's unilateral creditor action, IBC's CIRP is:
A. A collective process involving all creditors
B. Available only to a single secured creditor acting alone
C. Identical to SARFAESI in every respect
D. Applicable only to individual retail borrowers
E. A process with no creditor participation at all
Answer: A. CIRP is a collective, multi-creditor process.
🏛️ Legal Services Authorities Act — Lok Adalat
16 Lok Adalats were established under the:
A. Legal Services Authorities Act, 1987
B. SARFAESI Act, 2002
C. IBC, 2016
D. DRT Act, 1993
E. RBI Act, 1934
Answer: A. Lok Adalats derive from the 1987 Act.
17 Lok Adalats are particularly suited for banks to settle:
A. Small-value NPA accounts through compromise
B. Only accounts above ₹1,000 crore
C. Only cross-border disputes
D. Only criminal cases
E. No banking matters at all
Answer: A. Lok Adalats suit small-value NPA compromise settlements.
18 A Lok Adalat award has the legal force of:
A. A civil court decree, and no appeal lies against it
B. A non-binding suggestion only
C. A criminal court judgment
D. An RBI circular
E. No legal force whatsoever
Answer: A. Lok Adalat awards carry civil-decree force with no appeal.
⏳ Law of Limitation
19 Under the Limitation Act, the standard period to initiate legal action for a debt is generally:
A. 3 years
B. 100 years
C. 1 day
D. There is no limitation period
E. 10 days
Answer: A. The standard limitation period is 3 years.
20 A "time-barred" debt is:
A. Unenforceable through legal process, though not extinguished morally
B. Automatically doubled in amount
C. Fully enforceable with no restriction
D. Converted into equity automatically
E. Transferred to a different creditor by law
Answer: A. A time-barred debt is legally unenforceable, though not morally extinguished.
21 Banks obtain "acknowledgment of debt" from borrowers to:
A. Reset the limitation clock and keep legal recovery options alive
B. Cancel the loan entirely
C. Waive all interest
D. Transfer the debt to a third party
E. Convert the loan into a gift
Answer: A. Acknowledgment of debt resets the limitation period.
🧩 Mixed / Comprehensive
22 A bank with a well-secured, large NPA account where the mortgaged property is readily marketable would most likely pursue:
A. SARFAESI Act enforcement
B. A Lok Adalat settlement
C. No recovery action at all
D. Only a criminal complaint
E. Waiting indefinitely with no action
Answer: A. SARFAESI suits large, well-secured, readily marketable NPAs.
23 A borrower whose company is insolvent, with multiple creditors having competing claims, would most likely be addressed through:
A. The IBC's CIRP process before NCLT
B. A Lok Adalat, meant for small individual accounts
C. No legal mechanism exists for this scenario
D. Only the DRT, exclusively, with no other option
E. A criminal court trial
Answer: A. Multi-creditor insolvency is addressed via IBC's collective CIRP.
24 A small personal loan NPA of ₹50,000, where the borrower is willing to settle via a one-time compromise, would most efficiently be resolved through:
A. A Lok Adalat
B. The NCLT under IBC
C. The DRT, meant for larger debts
D. SARFAESI possession proceedings
E. No forum handles such small amounts
Answer: A. A Lok Adalat efficiently handles small, compromise-friendly NPAs.
25 Which of the following best explains why SARFAESI was considered a landmark reform compared to the earlier DRT-only regime?
A. It let secured creditors enforce security directly, without needing to first obtain a court/tribunal order
B. SARFAESI made recovery slower than the DRT process
C. SARFAESI eliminated the DRT/DRAT system entirely
D. SARFAESI applies only to unsecured loans
E. SARFAESI has no connection to secured creditors
Answer: A. SARFAESI enabled direct enforcement without prior court/tribunal orders.
26 Which of the following best explains why a bank must issue a Section 13(2) notice before invoking Section 13(4)?
A. The borrower must first be given a reasonable opportunity (60 days) to repay before the bank takes possession/sells the asset
B. Section 13(2) and 13(4) can be invoked simultaneously with no sequence
C. Section 13(4) can be invoked without ever issuing a 13(2) notice
D. The notice serves no due-process purpose
E. The 60-day period applies only after possession is already taken
Answer: A. The 60-day notice gives the borrower due-process opportunity to repay first.
27 Which of the following best describes the IBC's "waterfall" mechanism in liquidation?
A. A prescribed priority order (secured creditors, workmen's dues, etc.) for distributing liquidation proceeds
B. All creditors are paid equally regardless of security status
C. Unsecured creditors are always paid first
D. The waterfall applies only to CIRP, never liquidation
E. There is no priority order in IBC liquidation
Answer: A. The waterfall sets a priority order for distributing liquidation proceeds.
28 Which of the following would be an appropriate reason a bank prefers DRT proceedings over an ordinary civil suit for a large unsecured debt?
A. DRTs are specialised, faster forums designed specifically for bank/FI debt recovery
B. DRTs are always slower than ordinary civil courts
C. DRTs handle only criminal matters, never debt recovery
D. Civil suits are always faster than DRT proceedings
E. DRTs apply only to secured debts, never unsecured ones
Answer: A. DRTs offer specialised, faster recovery than ordinary civil courts.
29 Which of the following best explains the practical significance of a CIRP moratorium for a bank that is also a creditor?
A. The bank cannot pursue independent legal recovery action against the corporate debtor while CIRP is ongoing
B. The bank can freely initiate parallel SARFAESI action during the moratorium
C. The moratorium has no effect on any creditor's rights
D. The moratorium applies only to unsecured creditors
E. The moratorium extinguishes the bank's debt entirely
Answer: A. The moratorium halts independent recovery actions during CIRP.
30 Which of the following would be a valid strategic reason a bank chooses IBC over SARFAESI for a large corporate NPA with multiple secured lenders?
A. IBC provides a collective, binding resolution mechanism when multiple creditors with competing security interests are involved
B. IBC applies only when a single creditor is involved
C. SARFAESI is always superior for multi-creditor situations
D. IBC cannot be used for corporate borrowers
E. There is no strategic distinction between SARFAESI and IBC
Answer: A. IBC's collective process suits multi-creditor, competing-claim scenarios.
31 Which of the following best explains why the Law of Limitation matters even when a bank has strong documentary evidence of a loan?
A. Even a well-documented debt becomes legally unenforceable if the limitation period lapses without action/acknowledgment
B. Strong documentation eliminates any limitation concern entirely
C. The Limitation Act applies only to undocumented debts
D. Limitation periods apply only to criminal cases, never civil debt recovery
E. Documentation quality has no bearing on limitation at all
Answer: A. Even well-documented debts become unenforceable if the limitation period lapses.
32 Which of the following would be an appropriate use of a Lok Adalat for a bank, compared to litigation?
A. Achieving a quick, low-cost, mutually agreed settlement for accounts too small to justify prolonged litigation
B. Pursuing a large, complex corporate insolvency case
C. Enforcing security interest without court intervention
D. Filing an appeal against a DRT order
E. Initiating a criminal fraud investigation
Answer: A. Lok Adalat suits quick, low-cost settlement of smaller accounts.
33 Which of the following best captures why a borrower cannot use a SARFAESI appeal to pre-emptively stall enforcement before any action is taken?
A. The appeal mechanism under Section 17 is designed to review action already taken, not to prevent action from ever starting
B. Borrowers can always stall enforcement indefinitely with no restriction
C. SARFAESI appeals have no timing requirement at all
D. Section 17 appeals can be filed before any notice is even issued
E. There is no distinction between pre-emptive and post-enforcement appeals
Answer: A. Section 17 appeals review completed enforcement action, not pre-empt it.
34 Which of the following would be the correct sequence of events in a typical SARFAESI enforcement?
B. Section 13(4) possession first, then NPA classification
C. Section 17 appeal before any notice is issued
D. Sale of asset before any notice is given
E. No sequence exists; all steps occur simultaneously
Answer: A. This is the correct sequential SARFAESI enforcement process.
35 Which of the following best explains why the IBC introduced strict timelines (originally 180+90 days) for CIRP?
A. To prevent prolonged value erosion of the distressed company while resolution is pending
B. Timelines have no connection to asset value preservation
C. IBC intentionally allows indefinite CIRP duration with no limit
D. Timelines apply only to liquidation, never CIRP
E. Strict timelines were designed to slow down resolution deliberately
Answer: A. Timelines prevent prolonged value erosion during resolution.
36 Which of the following would be an appropriate consideration for a bank deciding between DRT and Lok Adalat for a ₹15 lakh unsecured NPA?
A. Since the amount is below DRT's ₹20 lakh threshold, Lok Adalat (or another forum) may be more appropriate
B. DRT is mandatory regardless of the debt amount
C. Lok Adalat applies only to amounts above ₹1 crore
D. The threshold has no bearing on forum selection
E. Only IBC can be used for any amount below ₹20 lakh
Answer: A. Below the DRT threshold, alternative forums like Lok Adalat may be more suitable.
37 Which of the following statements about the Committee of Creditors (CoC) under IBC is accurate?
A. It approves the resolution plan, and its decision binds even dissenting creditors
B. The CoC has no decision-making power under IBC
C. Only unsecured creditors can be part of the CoC
D. CoC decisions never bind any creditor
E. The CoC is identical to a Lok Adalat panel
Answer: A. CoC approval binds all creditors, including dissenters.
38 Which of the following would be an appropriate reason for RBI/banks to prefer resolving NPAs via IBC rather than prolonged SARFAESI litigation for a large, complex default?
A. IBC's collective, time-bound framework can achieve a faster, more comprehensive resolution when the default involves complex, multi-party claims
B. SARFAESI is always faster than IBC for complex, multi-creditor defaults
C. IBC applies only to individual retail borrowers
D. There is no functional difference between the two mechanisms
E. IBC cannot be used alongside secured creditor claims
Answer: A. IBC's collective framework suits complex, multi-party defaults.
39 Which of the following best describes why a bank's legal team tracks limitation dates as part of NPA account management?
A. Missing the limitation window could permanently bar the bank's legal recovery rights on that account
B. Limitation dates have no bearing on NPA management
C. Limitation periods apply only to standard assets, never NPAs
D. NPA accounts are exempt from the Limitation Act entirely
E. Tracking limitation dates is optional with no consequence
Answer: A. Missing limitation deadlines can permanently bar legal recovery.
40 Which of the following would be an appropriate parallel action a bank might take alongside a SARFAESI proceeding against a corporate borrower?
A. Filing (or participating in) an IBC application if the default also warrants insolvency resolution
B. No other legal action is ever permitted alongside SARFAESI
C. SARFAESI automatically bars any IBC filing
D. Parallel proceedings are always illegal under Indian law
E. Banks are barred from ever using more than one recovery mechanism
Answer: A. Banks may pursue IBC alongside/instead of SARFAESI depending on circumstances (subject to legal constraints on simultaneous action).
41 Which of the following best explains the exclusion of security interests below a prescribed threshold from SARFAESI's ambit?
A. SARFAESI's fast-track enforcement is intended for larger secured exposures, not every small-value security interest
B. No threshold exists under SARFAESI
C. SARFAESI applies only to amounts below ₹1,000
D. Threshold exclusions apply only to agricultural land, not amount-based exclusions
E. SARFAESI has never had any exclusions
Answer: A. SARFAESI targets larger secured exposures, excluding small-value interests.
42 Which of the following best describes why banks value the Lok Adalat route's "no appeal" feature?
A. It provides finality to the settlement, avoiding prolonged further litigation over the same dispute
B. The no-appeal feature makes settlements less desirable for banks
C. No-appeal awards are always unfavourable to the bank
D. Finality has no value in debt recovery
E. This feature applies only to DRT awards, not Lok Adalat
Answer: A. No-appeal finality avoids prolonged further litigation.
43 Which of the following would be an appropriate example of "operational creditor" versus "financial creditor" distinction relevant to IBC filings?
A. A bank that lent money is a financial creditor; a vendor owed for unpaid goods/services is an operational creditor
B. There is no distinction between the two creditor types under IBC
C. Only operational creditors can file for CIRP, never financial creditors
D. Banks are always classified as operational creditors
E. The distinction applies only to Lok Adalat proceedings
Answer: A. Banks (lenders) are financial creditors; unpaid vendors are operational creditors.
44 Which of the following would be a plausible reason RBI/policy encourages banks to resolve stressed assets early rather than waiting until formal default?
A. Early resolution frameworks (like restructuring) can preserve more value than a prolonged, adversarial recovery process after severe deterioration
B. Waiting always results in better recovery outcomes
C. Early resolution has no bearing on asset value preservation
D. Formal default recovery mechanisms are always faster than early resolution
E. Early resolution applies only to Lok Adalat cases
Answer: A. Early resolution preserves more value than prolonged adversarial recovery.
45 Which of the following best captures the overall progression of India's debt recovery legal framework?
A. From slow, generic civil courts, to specialised tribunals (DRT, 1993), to unilateral security enforcement (SARFAESI, 2002), to a comprehensive, time-bound collective insolvency code (IBC, 2016) — alongside informal Lok Adalat settlement for small accounts throughout
B. All four mechanisms were introduced simultaneously with no progression
C. IBC preceded SARFAESI historically
D. DRTs were established after SARFAESI
E. There has been no legal evolution in India's debt recovery framework
Answer: A. This correctly captures the historical progression: DRT → SARFAESI → IBC, with Lok Adalat throughout.
46 Which of the following would be an appropriate description of "secured creditor" status under SARFAESI?
A. A creditor holding a valid charge (mortgage/hypothecation/pledge) over the borrower's specific asset(s)
B. Any creditor, regardless of whether any security interest exists
C. Only unsecured creditors qualify under SARFAESI
D. Secured creditor status is irrelevant to SARFAESI eligibility
E. SARFAESI applies to government tax dues only
Answer: A. A secured creditor holds a valid charge over specific assets.
47 Which of the following would be a plausible outcome if a bank fails to act within the limitation period and also cannot obtain fresh acknowledgment?
A. The bank may lose its ability to legally enforce recovery of that debt through courts/tribunals
B. The debt automatically converts into a government-guaranteed asset
C. No consequence follows regardless of the lapsed period
D. The borrower is automatically imprisoned
E. The bank's licence is revoked
Answer: A. Missing limitation with no acknowledgment can bar legal enforceability.
48 Which of the following best explains why IBC resolution plans require approval by a specified majority of the Committee of Creditors (not unanimous consent)?
A. Requiring unanimity could let a single dissenting creditor indefinitely block a viable resolution, defeating the code's time-bound objective
B. Majority approval has no bearing on resolution efficiency
C. Unanimous consent is actually required under IBC, with no majority threshold
D. The CoC's voting mechanism is irrelevant to plan approval
E. IBC bans any voting mechanism for resolution plans
Answer: A. A majority (not unanimous) threshold prevents a single holdout from blocking resolution.
49 Which of the following best summarises why JAIIB tests all four recovery mechanisms together rather than just one?
A. A practising banker must know which legal route fits a given default scenario — debt size, security status, number of creditors, and urgency all matter
B. Only one mechanism is ever relevant in real banking practice
C. The four mechanisms are functionally identical, making distinction unnecessary
D. Recovery law has no practical relevance to a banker's daily work
E. JAIIB tests these topics purely as historical trivia with no applied relevance
Answer: A. Choosing the right recovery route based on scenario specifics is a core banking skill.
50 Overall, which statement best summarises this topic?
A. India's debt recovery framework spans specialised DRT/DRAT tribunals (1993) for debts above ₹20 lakh, court-free SARFAESI enforcement (2002) for secured NPAs via Section 13(2)/13(4), the collective, time-bound IBC (2016) for insolvency resolution/liquidation, Lok Adalats for small-value compromise settlements, and the Limitation Act's 3-year window governing all of them
B. All recovery mechanisms are functionally identical with no distinguishing features
C. SARFAESI requires mandatory court approval for every single enforcement step
D. IBC applies only to individual retail loan defaults
E. The Limitation Act has no application to bank debt recovery
Answer: A. This correctly captures the full recovery-of-dues legal framework.
Disclaimer: This article is prepared for educational and exam-preparation purposes only, summarising recovery-of-dues laws as of September 2026. Candidates should cross-check the latest official IIBF syllabus and statutory text before the exam.