Recovery of Debts and Bankruptcy Act, 1993 Vs. Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), 1993

Recovery of Debts and Bankruptcy Act, 1993 Vs. Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), 1993

The names “Recovery of Debts and Bankruptcy Act, 1993” and “Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), 1993” refer to the same Indian legislation. The official short title of the Act was amended in 2016 to include the reference to “Bankruptcy”.

Original Name: When enacted, the legislation was officially known as the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (Act No. 51 of 1993). It was commonly referred to as the RDDBFI Act or the DRT (Debt Recovery Tribunal) Act.

Amended Name: The Act was later amended by the Insolvency and Bankruptcy Code, 2016. Section 249 of the 2016 Code substituted the short title to its current form: The Recovery of Debts and Bankruptcy Act, 1993 (RDB Act).

The primary objective of the Act remains the same: to provide for the establishment of Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) for the expeditious adjudication and recovery of debts owed to banks and financial institutions. The 2016 amendment also inserted provisions related to the insolvency resolution and bankruptcy of individuals and partnership firms, although these provisions are not yet fully in force.

The two names refer to the same legislation, the Indian law originally known as the Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act of 1993, which was later renamed the Recovery of Debts and Bankruptcy (RDB) Act of 1993. The change in name occurred when the Insolvency and Bankruptcy Code (IBC) of 2016 was enacted.

Original Act: The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI) was established to create Debt Recovery Tribunals (DRTs) for the swift adjudication and recovery of debts owed to banks and financial institutions.
Name Change: In 2016, following the enactment of the IBC, the title of the Act was officially changed to the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act). The IBC also amended the RDB Act to include the insolvency resolution and bankruptcy of individuals and partnership firms.

Purpose: The RDB Act empowers banks and financial institutions to recover debts that are above a specified amount (currently Rs. 20 lakh) by approaching the DRT.

Complementary laws: The RDB Act works in conjunction with other legislation, such as the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

The Recovery of Debts and Bankruptcy Act, 1993 and the Recovery of Debts Due to Banks and Financial Institutions Act (RDDBFI), 1993 refer essentially to the same legislation commonly known as the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act). This Act was established to create Debt Recovery Tribunals (DRTs) for expeditious adjudication and recovery of debts owed specifically to banks and financial institutions.

• It provides for the setting up of Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs) to address debt recovery cases efficiently.

• The Act covers debts where the amount is Rs. 10 lakhs or more, owed to banks and financial institutions.

• It provides a judicial mechanism for recovery, where banks and financial institutions file applications in DRTs, which adjudicate and issue recovery certificates for enforcement.

• The Act complements but differs from the SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002), which is a non-judicial tool allowing banks to directly enforce security interests without court intervention.

• The RDDBFI Act covers the recovery of all debts due to banks and financial institutions, whether secured or unsecured.

• Jurisdiction, powers, and authority of the DRTs and DRATs are defined by this Act, focusing on judicial adjudication of debt recovery disputes.

• The RDDBFI Act is often referred to synonymously with the Recovery of Debts and Bankruptcy Act, 1993, reflecting its dual role in debt recovery and bankruptcy matters relating to debts owed to banks and financial institutions.

There is no substantive difference as such between the “Recovery of Debts and Bankruptcy Act, 1993” and “Recovery of Debts Due to Banks and Financial Institutions Act, 1993” — they are the same Act, commonly known as the RDDBFI Act. Its purpose is to establish tribunals for judicial recovery of debts due to banks and financial institutions, distinct from but complementary to other mechanisms like SARFAESI. This Act ensures a legal and procedural framework for banks and financial institutions to recover dues through tribunals with defined powers and jurisdiction.​

Below is a clear comparison between the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act) and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act).

Recovery of Debts and Bankruptcy Act, 1993 vs. RDDBFI Act, 1993

Both names refer to the same legislation, but at different points in time.

1. RDDBFI Act, 1993 (Original Act)

Full Name: Recovery of Debts Due to Banks and Financial Institutions Act, 1993

• Enacted to provide for the establishment of Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate Tribunals (DRATs).

• Purpose: Faster recovery of debts due to banks and financial institutions.

• Focused primarily on speedy adjudication of debt recovery cases exceeding ₹10 lakhs.

• Contained provisions for:

  • Filing of Original Applications (OAs)

  • Recovery procedures by Recovery Officers

  • Powers of DRTs and DRATs

2. Recovery of Debts and Bankruptcy Act, 1993 (New Name)

Reason for Name Change:

• In 2016, the Insolvency and Bankruptcy Code (IBC), 2016 introduced major reforms.

• As part of harmonizing debt recovery laws with the new insolvency regime, the RDDBFI Act was amended and renamed as:

Recovery of Debts and Bankruptcy Act, 1993 (RDB Act)

(effective from 1 September 2016)

Key Amendments Introduced:

• Integration with IBC, 2016, especially for individual and partnership bankruptcy.

• Enhanced powers of DRTs for:

  • Insolvency and bankruptcy matters for individuals and partnership firms.

• Digitization:

  • Mandatory electronic filing

  • Online issue of summons/notices

• Faster adjudication timelines

• Allowing banks to secure pending debt recovery cases more efficiently.

The RDDBFI Act, 1993 is the original debt recovery law.
After amendments in 2016, its name was changed to the Recovery of Debts and Bankruptcy Act, 1993, with broader powers related to bankruptcy and alignment with the IBC, 2016.

So, the two are not separate laws, but the same Act before and after the 2016 amendment.