Measures To Solve The Problems Of Non-Performing Assets Npa

Measures to Solve Problems of NPA

The problems of NPA induce got been receiving greater attending since 1991 inwards India. The Narasimham Committee recommended a number of steps to cut NPA. In the 1990's the Government of Republic of Republic of India (GOI) introduced a number of reforms to deals amongst the problems of NPA.

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Major steps taken to solve the problems of Non-Performing Assets inwards India :-

1. Debt Recovery Tribunals (DRTs)

Narasimham Committee Report I (1991) recommended the setting upward of Special Tribunals to cut the fourth dimension required for settling cases. Accepting the recommendations, Debt Recovery Tribunals (DRTs) were established. There are 22 DRTs in addition to v Debt Recovery Appellate Tribunals. This is insufficient to solve the work all over the Blue Planet (India).

2. Securitisation Act 2002

Securitisation in addition to Reconstruction of Financial Assets in addition to Enforcement of Security Interest Act 2002 is popularly known every bit Securitisation Act. This act enables the banks to number notices to defaulters who induce got to pay the debts inside sixty days. Once the abide by is issued the borrower cannot sell or dispose the assets without the consent of the lender. The Securitisation Act farther empowers the banks to induce got over the possession of the assets in addition to management of the company. The lenders tin recover the dues past times selling the assets or changing the management of the firm. The Act too enables the establishment of Asset Reconstruction Companies for acquiring NPA. According to the provisions of the Act, Asset Reconstruction Company of Republic of Republic of India Ltd. amongst viii shareholders in addition to an initial majuscule of Rs. 10 crores has been laid up. The viii shareholders are HDFC, HDFC Bank, IDBI, IDBI Bank, SBI, ICICI, Federal Bank in addition to South Indian Bank.

3. Lok Adalats

Lok Adalats induce got been found suitable for the recovery of pocket-size loans. According to RBI guidelines issued inwards 2001. They encompass NPA upward to Rs. v lakhs, both suit filed in addition to non-suit filed are covered. Lok Adalats avoid the legal process. The Public Sector Banks had recovered Rs. twoscore Crores past times September 2001.

4. Compromise Settlement

Compromise Settlement Scheme provides a uncomplicated machinery for recovery of NPA. Compromise Settlement Scheme is applied to advances below Rs. 10 Crores. It covers suit filed cases in addition to cases pending amongst courts in addition to DRTs (Debt Recovery Tribunals). Cases of Willful default in addition to fraud were excluded.

5. Credit Information Bureau

A skillful information arrangement is required to preclude loans from turning into a NPA. If a borrower is a defaulter to i bank, this information should move available to all banks then that they may avoid lending to him. H5N1 Credit Information Bureau tin aid past times maintaining a information banking concern which tin move assessed past times all lending institutions.