Management of NPA { KAMAL (MBA)(IFTM MORADABAD)

Presented By

KAMAL SINGH

MANAGEMENT OF NPA

(Non Performing Assets)

NON PERFORMING ASSETS

Non Performing Assets means a loan or

account of borrower, which has been

classified by a bank or financial institution as

sub standard, doubtful or loss assets, in

accordance with directions or guidelines

relating assets classification issued by RBI.

Non Performing Assets is the assets that does

not provide a return or effectual in generating

income.

PLANNING

ORGANISING

STAFFINGDIRECTING

CONTROLING

NPA have been divided into following four types:-

Standard Assets : A standard asset is a performing asset.

Standard assets generate continuous income. Such assets

carry a normal risk and are not NPA in the real sense. So, no

special provisions are required for Standard Assets.

Sub-Standard Assets : All those assets (loans and

advances) which are considered as non-performing for a period

of 12 months are called as Sub-Standard assets.

Doubtful Assets : All those assets which are considered

as non-performing for period of more than 12 months are

called as Doubtful Assets.

Loss Assets : All those assets which cannot be

recovered are called as Loss Assets.

INTERNAL FACTORS

Defective Lending Process

Inappropriate Technology

Managerial Deficiencies

Analyze The Balance Sheets

Purpose Of The Loan

Poor Credit Appraisal System

EXTERNAL FACTORS

Ineffective Recovery Tribunal

Willful Defaults

Natural Calamities

Industrial Sickness

Lack of Demand

Change In Govt. Policies

TOOLS FOR RECOVERING

NPA

(1) LOK ADALAT

(2) DEBT RECOVERY TRIBUNALS

(3) SRFAESI ACT 2002

(4) CORPORATE DEBT RESTUCTURING

LOK ADALAT

Lok Adalat as a very effective system of recover dues from borrower.

CORPORATE DEBT RESTUCTURING

The CDR System is applicable to standard and sub standard accounts with

potential cases of NPAs getting a priority.

SARFAESI ACT- 2002

SARFAESI ACT-2002 provides for enforcement of security interest in

movable (Tangible & Intangible assets including accounts receivable) and

immovable property without the intervention of the court.

DEBT RECOVERY TRIBUNAL

The Debts Recovery Tribunal (DRT) enforces provisions of the Recovery of

Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993 and also

Securitization and Reconstruction of Financial Assets and Enforcement of

Security Interests (SARFAESI) Act, 2002

IMPACT OF NPA

1• REDUSE PROFITABILITY

2

• LIQUIDITY & OPPORTUNITY

COST

3

• IMPACT ON SHARE PRICES

IMPACT OF NPA

4• BORROWER GOODWILL

5• BANKING GROWTH

6• ECONOMIC GROWTH