Indian laws and courts are hampering the recovery of the massive $28 billion that Indian banks are saddled with in bad debts, an Australian financial consultant said Sunday.

Should even half of this be recovered, it will cover the $11-12 billion that the Indian government estimates the banks will have to raise in the next five years to finance large infrastructure projects, said Bill O'Chee of Queensland-based debt recovery firm Knights Insolvency International.

O'Chee was participating in a question-and-answer session with India's Finance Minister P. Chidambaram after the inauguration of the 21st India Economic Summit here.

"Indian laws and judges are coming in the way of debt recoveries. Are you giving any thought to this?" O'Chee asked.

Chidambaram explained: "We have a two-track system. There is the debt recovery tribunal and there is the securitisation law. One is a general law to recover all debts and the other is a special law to recover corporate debts.

"There were some contradictions between the two and so we amended the laws. But there are two judgements that did not quite notice the difference between the two.

"We are now in the Supreme Court, trying to resolve the conflict between the two judgements," the finance minister said.

Chidambaram did not dispute O'Chee's figure of bad debts.

Responding to a question before this, he maintained that India had a "well regulated" banking sector, due to which bad debts were a "shade less than two percent (of the banks' advances)".

At the same time, the minister spoke of the "inadequate capital" with Indian banks and of their need to raise $11-12 billion in the next five years.

"Unless they do that, they cannot finance large infrastructure projects," Chidambaram said.