Directorate of Institutional Finance

Bank Recovery Incentive Scheme (BRISC) 1.1


About the RRC

बैंक वसूली प्रोत्‍साहन योजना की प्रस्‍तावना An Introduction to the Scheme
               Credit is an important input for economic growth. Banks as a part of financial system play crucial role in mobilizing resources and in their allocation to different sectors of the economy and projects in conformity with priorities underlying the development of overall national planning process.

     Until independence, the rural population had little or no access to institutional agencies for their credit needs. With the dawn of freedom, the institutional credit system geared up to play a greater role in transforming the conditions of rural life. While sectoral budgetary allocations were, to an extent, instrumental in giving shape to the policy concerns of the Sate, institutional credit played pivotal role in successful implementation of development strategies, programmes and plans of governments. The joint commitment of governmental agencies and financial institutions towards growth of economy and welfare of the masses is most significantly reflected in priority sector financing (PSF), towards which banks were expected to commit at least 40% of their total advances. Although various agencies involved in PSF have, by now, evolved mutually acceptable strategies for discharging their respective responsibilities, a number of underlying issues still need serious thought and efforts. Recovery of bank overdues is one of these issues.

   Though, entire exercise in strengthening partnership between government and banks call for greater cooperation, state efforts for recovery of bank overdues assumes greater significance. Commercial Banks assist State Government in meeting targets for institutional financing of government sponsored programmes and schemes of poverty alleviation and self employment. As disbursement of loans to beneficiaries under government sponsored schemes are target oriented, very often recoveries are not upto the mark. Recoveries are lifeblood of financial system, as these make recycling of funds possible. Therefore, Commercial Banks have constantly been urging State Government to assist them in recoveries, just like the banks assist State Government in meeting targets. 
 
Schemes by Govt. for Bank Recoveries
            From time to time State Government instituted special arrangements to encourage recoveries under Madhya Pradesh Lok Dhan (Shodhya Rashiyon Ki Vasuli) Adhiniyam 1987, i.e. posting of Revenue Tehsildars, posting of retired revenue officials (Tehsildars) in banks, establishment of special recovery units in districts, delegation of powers of revenue officers (Tehsildars) to bank officials. In 1988 special rules were made under Madhya Pradesh Lok Dhan (Shodhya Rashiyon Ki Vasuli) Adhiniyam 1987 to establish “Special Recovery Unit” in the district for recovering the bank overdues. Provisions were made to confer recovery powers to bank officers to facilitate their recovery. Under these rules, Special Recovery Units were established in six selected districts on an experimental basis. These Units had to be closed down due to non-availability of the staff, besides poor performances. Apart from these the State Government has been advising the districts administration to extend due support for recovery of bank overdues through revenue machinery. During the year 1992-93, at the behest of the Development Commissioner all Collectors were asked to help banks in recovering their overdues in five chronic cases of willful defaulters per branch. All these arrangements failed to yield significant impact mainly due to lack of motivation on the part of officials posted for effecting bank recovery and lack of involvement of revenue administration in general. The need remained to strengthen the existing system of recovery, through sustained motivation and a stable institutional framework for action.  
 
Legislative efforts of Govt. of M.P.
                One of the study groups appointed by the National Credit Council in 1968 to examine the need for adopting area / project approach in implementing schemes for extending credit to agriculture including credit for commercially viable projects in the rural electrification and minor irrigation had drawn attention towards the need for legislative and administrative aspects, as some of state enactments were somewhat outmoded in the light of credit needs of agriculture. An expert group under the chairmanship of Shri R.K.Talwar was constituted to go into the details of the existing provisions and make suitable recommendations aimed at enlarging the role of commercial banks in meeting the growing credit needs of agriculture. The Committee, among other things, had recommended enactments of legislation by State Government.

           With a view to ensure speedy recovery of agricultural dues of banks and to facilitate prompt recovery of dues of commercial banks without having to resort to protracted and time consuming litigation in Civil Courts, this Expert Group (Talwar Committee Report 1971) had also recommended that State Governments should empower one of its official with authority to issue order having the force of a decree of a Civil Court for payment of any some due to a bank by attaching some of property charged / mortgaged in favour of the bank. For implementing this recommendation, the Expert Group recommended enactment of legislation by various State Governments and union Territories on the basis of ‘model bill’ titled “(State) Agricultural credit operations and Miscellaneous Provisions (Banks) Bill, 1970” evolved by them. Accordingly, the State of Madhya Pradesh had enacted Madhya Pradesh agricultural Credit operations and miscellaneous (Banks) Act 1970. To help the banks in recovering their overdues, Madhya Pradesh State Government had promulgated Madhya Pradesh Public Moneys (Recovery of Dues) Act, 1981.

          A new legislation entitled “Madhya Pradesh Lok Dhan (Shodhya Rashiyon Ki Vasuli) Adhiniyam 1987” was enacted by the State of Madhya Pradesh to facilitate recoveries of bank overdues under RRCs by revenue authorities. This new Act came in force with effect from 2nd January, 1988. This Act provided for recovering the banks overdues as revenue recovery through the State Government revenue machinery. It repealed and replaced the Madhya Pradesh Public Moneys (Recovery of dues) Act 1981.

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