22.14         ndian   onom
     in it) while in the latter contributors of funds get
                                                               Debt recovery tribunAl (Drt)
     financial returns (from the project set up with the
     fund). In the financial model of crowdfunding,         Banks and financial institutions have often faced
     contributors might be given equity/share in the        a tough time in recovering loans, on which
     upcoming project.                                      the borrowers have defaulted. To expedite the
                                                            recovery process, the Committee on the Financial
        crowDing-out effect                                 System, headed by Mr. Narasimham considered
                                                            the setting up of special tribunals, with special
     A concept of public finance which means an
                                                            adjudicator powers. This was felt to be necessary
     increase in the government expenditure which has
                                                            to carry through financial sector reforms. Since
     an effect of reducing the private sector expenditure.
                                                            there is an immense overload on the Indian legal
                                                            system at present, recovery of many unpaid debts,
                                                            due to banks or financial institutions, are held up,
     The concept of corporate social responsibility         indefinitely. This affects the balance sheets of the
     (CSR) is fast gaining popularity among the             banks as the amounts involved are very large.
     corporate sector of the world. As per the experts, the      It was thought that an independent forum
     CSR is qualitatively different from the traditional    was needed to deal with debts of these types. Thus,
     concept of passive philanthropy by the corporate       in 1993 the Recovery of Debts Due to Banks and
     houses. Basically, the CSR acknowledges the debt       Financial Institutions Act’ was passed. The Act,
     that the corporates owe to the community within        however, imposes a limitation and states that only
     which they operate. It defines the corporates’         those debts which are in excess of Rs. 10 lakhs (or
     partnership with social action groups (i.e., the       upto Rs. 1 lakh, where the Central government
     NGOs) in providing financial and other resources       specified certain types of debts) would come
     to support development plans, especially among         under its purview.
     disadvantaged communities. There is stress
     on long-term sustainability of business and               Decoupling theory
     environment and the distribution of well-being.
                                                            Decoupling theory holds that Asian economies,
        Debenture                                           especially emerging ones, no longer depend on
                                                            the United States economy for growth, leaving
     An instrument of raising long-term loan by             them insulated from a severe slowdown there, even
     companies, having a maturity period bearing an         recession—looked true for some time as Asian
     interest (coupon rate). Theoretically they may be      stocks rose while socks in the US fell - however,
     secured or unsecured by assets such as land and        as fears of recession mounted in the US, stocks
     buildings of the issuing company (known as             declined heavily. Looking this happen in late
     collateral).                                           2008 the decoupling theory regarding the Asian as
          Debenture holders are provided with a prior       well as the EU economies have now lost ground.
     claim on the earnings (by interest) and assets of      But still the emerging economies are able to have
     the company in the situation of liquidation of the     higher growth rates and exports in comparision to
     company over the preference and equity shareholders    the US – that is why the theory is still debated by
     of the company.                                        the experts.