Npa Recovery Can Solve The Biggest Problems Of Bad Loans

By Author: NPA Consultant
Total Articles: 40
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NPA management has been always a matter of concern. Every economist and financial expert has different views about recovery and account settlement. Why is it such an important issue?

Well, it is because a non-performing asset is not just bad for the financial institute or bank that issues the loan, but also for the economy. It has been observed that the recovery of the NPA has worsened in the past decade.

There was an estimate that the NPA rate will reduce as the economy will improve. However, the pandemic situation has impacted the economy badly. Hence, there is no scope of improving the NPA soon.

In this situation, rigorous efforts should be made to recover non-performing assets so that banks and financial institutes can improve their condition.

The introduction of the Insolvency and Bankruptcy Code has helped
Indeed, banks have been heavily relying on this code for the recovery and npa account settlement. Experts assume that banks will be able to release more than 25000 crores in the next five years. The overall NPA recovery rate will sustain at 33% or more, which is a healthy figure.

However, ...
... it is equally essential to strengthen the npa recovery process as well. Without that, the desired results will not be achieved.

The recovery tools can be Lok Adalat, legal proceeding under the SARFAESI act, and DRT (Debt Recovery Tribunal). Whatever method is used, the aim is to recover the amount as much as possible.

NPA recovery is important for the health of banks and financial institutes
Both NPA recovery and debt settlement are important for the right functioning and financial well-being of a bank. Unless the loan amount is not recovered, it cannot be reinvested. Thus, the circulation of money does not happen.

A npa consultant in india helps in speeding up the recovery process. By recovering the outstanding amount, a bank strengthens its working capital. It achieves higher efficiency and capitalizes on the net profit. It is the reason, npa in india is the most concerning issue today. It is not just about unrecovered money but has various dimensions to it.