NPA Management
NPA Management
NPA Management
Management
Fig1:AssetClassification
Assets
• Drain of profit.
External factors :
• Ineffective legal framework & we ak
recovery tribunals
• Lack of demand / economic recession or
slowdown
• Change in Govt. policies
• Wilful defaults by customers
• Alleged political interferences
Factor comprising rise in NPAs:
Internal factors :
• Defective Lending process
• Inappropriate / non –use of technology like
MIS , Computerization
• Improper SWO T analysis
• Inadequate credit appraisal system
• Managerial deficiencies
• Absence of regular industrial visits & monitoring
• Deficiencies in re-loaning process
• Alleged corruption
• Inadequate networking & linkages b / w banks
sbI
• State Bank of India
– a. Preventive Management
– b. Curative Management
NPA Managing Strategies
a. Preventive Management - It is rightly
said that prevention is better than cure.
• Developing ‘ K n o w Y o u r Client’ profile
(KYC)
• Monitoring Early Warning Signals
• Installing Proper Credit Assessment and
R i s k Management Mechanism
• Reduced Dependence on Interest
• Generating Watch-list/Special Mention
Category
NPA Managing Strategies
b. Curative Management
• Re-phasement of loans - New loan that replaces the outstanding
balance on an older loan, and is paid over a longer period, usually with a lower
instalment amount.
• Pursuing Corporate Debt Restructuring (CDR)- some of a
company's debt may be forgiven by creditors in exchange for an equity
position in the company
• Encouraging rehabilitation of potentially viable units
• Encouraging acquisition of sick units by healthy units
• Entering compromise schemes with borrowers/
Entering one time settlement
NPA Managing Strategies
• Using L o k Adalats for compromise settlement
for smaller loans in “doubtful” and “ l o s s ”
category.
• Using Asset Reconstruction Company
(ARC) - acquisition by securitisation company or reconstruction
company of any right or interest of any bank or financial institution in
any financial assistance for the purpose of realisation of such financial
assistance
• Approaching Debt Recovery Tribunals
(DRTs).
• Recovery Action against Large N P A s
• Circulation of Information of Defaulters-
Strengthening Database of Defaulters