Debt Recovery Management in Banks

8/13/2019 Debt Recovery Management in Banks

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INTRODUCTION

Banks were never so serious in their efforts to ensure timely recovery and consequent

reduction of NPAs as they are today. It is important to remember that recovery management, beof fresh loans or old loans, is central to NPA management. his management process needs to

start at the loan initiating stage itself. !ffective management of recovery and NPA comprise two

pronged strategy. "irst relates to arresting of the defaults and creation of NPA thereof and the

second is to handling of loan delinquencies. he tenets of financial sector reforms were

revolutionary which created a sense of urgency in the minds of staff of bank and gave them a

message that either they perform or perish. he prudential norm has forced the bank to look

into the asset quality.

A debt from a loan, credit line or accounts receivable that is recovered either in whole or

in part after it has been written off or classified as a bad debt. In accounting, the bad debt

recovery would credit the #allowance for bad debts# or #bad debt reserve# categories, and reduce

the #accounts receivable# category in the books.

Not all bad debt recoveries are #like$kind# recoveries. "or e%ample, a collaterali&ed loan

that has been written off may be partially recovered through sale of the collateral. 'r, a bank

may receive equity in e%change for writing off a loan, which could later result in recovery of the

loan and, perhaps, some additional profit.

1 (BANKING & INSURANCE)


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Recovery

Meaning:

!Recovery i" #e$ine# a" %e 'roce"" o$ regaining an# "aving "oe%ing o"% or in #anger o$

*ecoing co"%"+,

(ecovery is a key to the stability of the banking sector there should be no hesitation in

stating that Indian banks have done a remarkable )ob in containment of Non$Performing Assets

*NPA+ considering the overall difficult environment. (ecovery management is also linked to the

banks interest margins we must recogni&e that cost and recovery management supported by

enabling legal framework hold the key to future health and competitiveness of the Indian banks.

No doubt, improving recovery management in India is an area requiring e%peditions and

effective actions in legal institutional and )udicial processes. Banks at present e%perience

considerable difficulties in recovering loans and enforcement of securities charged with them.

he e%isting procedure for recovery of debts due to banks has blocked a significant portion of

their funds in unproductive assets, the value of which deteriorates with the passage of time.

Rea"on" $or Recovery Manageen%:

Bank deserves to be paid for their products and services. he collection professionals

in (ecovery -anagement ystems will work to see that.

(easonable fees with no up$front costs. hey get paid only when it is collect.

(ecovery -anagement ystems will design a collection strategy to meet banks

ob)ectives. Bank can recover their debts without losing customers.

-onthly settlements with meaningful reporting. tatus updates on demand.

- (BANKING & INSURANCE)


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!%tensive e%perience obtaining and collecting money )udgments in 'hio. /arnishments,

liens, and levies (ecovery -anagement ystems will collect when legal action is the only

option.

0utting edge skip$tracing tools and techniques recovery -anagement ystems can work

1st, 2nd, and 3rd placements and even turn bank old )udgments into money.

A#van%age" & Di"a#van%age" o$ Recovery Manageen%: A#van%age" :

• he process of assigning debt collection to outsides enables officials from Banks to

develop more remunerative new business.

• hird party involvement in debt collection has proven time and again to improve the

chances of recovering bank dues as these people are specialists in negotiating with

debtors and the result usually speak for themselves.

• A skillfully negotiated debt collection could mean saving on litigation cost.

• he process of assigning debt collection to outsides enables officials of non$Banks.

0ost to develop more beneficial new business.

Di"a#van%age" :

• 4ebt collection does cost money5

• he debt collection agency will be establishing a relationship with the banks

customers, which could be potentially harmful if they sour that relationship by not

dealing with customers in a courteous manner.

. (BANKING & INSURANCE)


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I'or%an% /oin%" $or De*% Recovery:

On %e *a"i" o$ %e $oregoing 'roce#0re $or nora recovery 'roce"" 2e ay i"%

*eo2 cer%ain Don3%" $or %e #en% recovery 2ic are a" $oo2":

• 4ont violate or breach the recovery policy, procedure etc. prescribed by the principal.

• 4ont e%ceed the authority given in the recovery arrangement.

• 4ont make a call to the debtor before 67.66 hours or after 21.66 hours.

• 4ont make anonymous calls or bunched calls to the debtor, which may be perceived as

harassment.

• 4ont conceal or misrepresent your identity during calls and visit or other interaction

with the debtor.

• 4ont show uncivil8indecent8dirty behavior or use such language during calls and visits

to the debtor.

• 4ont harass8humiliate8intimidate8threaten the debtor$verbally or physically.

• 4ont intrude into the privacy of the debtors family members, friends8colleagues.



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• 4ont disclose the customers debts8dues8account information to unauthori&ed person.

• 4ont forget that the debtor is a human being and deserves to be treated with fairness

and courtesy, despite the fact that he8she is a debtor for the time being.

Eeen%" o$ De*% Recovery:

he agency regarding debt recovery contains the main terms and conditions agreed by

the principal *bank+ and the agent. he main elements of the debt recovery would generally

include9

• pecific tasks to be accomplished e.g. the amount to be recovered from the specified

loan accounts in default and the broad time frame.

• 4ebt (ecovery Policy and Procedure of the bank.

• 0ode of conduct in recovery process may include dress code, verbal and written

communication rules top be followed by the individuals employed by the agency for the

purpose of collection.

• 4uties of the agent.

• (ights of the agent, including the commissions8fees payable by the principal to the

agent8agency for the recovery of debt8other services.

he 4ebt (ecovery Policy and code of conduct in the debt recovery will be regulations

compliant, i.e. in accordance with the directives and guidelines of the (eserve Bank of India

issued from time to time. If, however these are not incorporated therein, it is advisable for

agents to seek clarification from the principal, as compliance with the regulations is mandatory

for the banks and also their recovery agents.



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he 4ebt (ecovery Agreement between the credit institution and the debt recovery

agent8agency serves as the contractual arrangement that is legally binding on both. uch an

arrangement, being bank specific may vary from bank to bank in details. he duties of the

agent8agency the authority delegated and code of conduct prescribed by the bank in the process

of recovery function would to be carefully noted for strict compliance by the agent.

S%ra%egy $or De*% Recovery:

4evising a strategy helps in achieving a set goal or ob)ective. (ecovery agents should

therefore devise a strategy for debt recovery. he following guidelines would help in preparing

proper strategy for debt recovery9

• he collection process should be compliant to the bank$specific recovery norms and also

regulatory guidelines.

• he collection timing should be synchroni&ed to the cash inflow pattern of the debtors9

"or e%ample, recovery from salaried employees should be timed when salary is received

by or credited to the debtors account, normally at the moth$end. In case of -!

borrowers the effort should coincide with cash flow on account of sales. In case a

collection from agriculturist should be made, then it should be soon after the crops are

sold. his will call for knowledge of bank products on the part of agents. It should be

the endeavour of the agent that collection should be made well before the cash inflows

are spent away by the debtor for meeting other e%penses.

• Adopt different collection strategy for different debtor types9 his is based on the

dictum that :one si&e does not fit all. In the foregoing paragraphs, three types of debtors

have been described and they need different strategies for recovery success9

Normal debtors, i.e. who :can pay and :will pay if reminded or8and persuaded to

pay.

4ifficult debtors, i.e. those who :can pay, but :will not pay.



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4oubtful debtors, i.e. whose who can pay the reduced amount as negotiated with

them.

• ;hile different strategies are required for different types of debtors, the following are

the common points to be followed in all kinds of recovery strategies9

(ecovery effort should start with the establishing a good rapport with the debtor.

0ommunication, listening and persuasive skills would be applied in building good

interpersonal relations.

/o through the :know


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DE8AU9TS O8 9OAN:

'ne ma)or problem which the banks in India are facing is the problem of recovery

and overdue of loans. he reasons behind this may vary for different financial institutions as it

depends upon the respective nature of loans. =ere an attempt is made to find out the some

causes of default of loans due to which financial Institutions are facing the problems of overdue

of loans. he recovery officers of different banks are interviewed for finding out the causes of

defaults. hese reasons may be useful for the and Banks for the better recovery of loans in

future. After surveying different banks, the following can be said to be some of the main causes

of default of loans from industrial sector9$

I'ro'er "eec%ion o$ an en%re'rene0r :

election of the right !ntrepreneur is one of the ma)or factors in the profitability of

Banks. wo ma)or criterions namely the intention to repay and the capacity to repay should be

properly dealt with in 0redit !valuation. he entrepreneurs who have the willingness,

capabilities, qualities and the requisite e%pertise for successfully setting up and running an

industrial unit, should be identified with proper prudence and )udiciousness. his is the best way

of safeguarding the investment of a bank, thereby ensuring proper and timely repayment.

>nbiased survey reports of the site and capability of the !ntrepreneur must be verified by the

surveyor. In other words the credit worthiness of the entrepreneur as well as the pro)ect should

undergo very careful scrutiny before the sanctioning of the loan. trict measures and security

should taken before the sanctioning of the loan.

(BANKING & INSURANCE)


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De$icien% anay"i" o$ 'ro;ec%


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labour results in unwarranted deceleration of production thereby hampering the profitability of

the concerned unit. 'n the other hand labour welfare is grossly neglected by industrial units

leading to a feeling of dissatisfaction and disgruntlement among the working force.

here are numerous instances where political and vested interests tend to instigate labour

problems.

De$a0% #0e %o na%0ra caai%ie":A certain proportion of default can be attributed to natural calamities such as floods,

earthquakes, storms, etc. Prima$facie this would seen to be a factor beyond human control. A

more detailed insight, would however, suggest that certain precautionary preventive measures

such as proper meteorological and topographical analysis of the industrial sight can go a long

way in reducing this element of risk. Natural calamities not only affect the unit directly but also

e%ert additional burden on the /overnment in terms of relief measures, waivers etc. A further

fraction, albeit nominal, is of such borrowers who tend to take undue advantage of such natural

calamities in order to avoid repayment, thereby increasing the magnitude of default.



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/oicy /roce""e" an# /roce#0re o$ De*% Recovery Manageen%

Meaning:

0ollection of post due debt or receivables of the bank that has engaged a recovery agent

is the core function of the agent. All other functions, as discussed in the preceding unit, revolve

around this core function. ;e will discuss in detail the policy, processes and procedure for debt

recovery function in this unit.

Banks lay down their policy and procedure for collection of past due debts in conformity

with the legal and regulatory framework. he banks will in particular, abide by9

he (BI directives on recovery of debt, including recovery agents engaged by the bank.

he -odel Policy on collection of 4ues and (epossession of security framed by the Indian

Banks Association.

A bank will normally incorporate its policy and procedure for debt recovery in the

arrangement entered into its recovery agents. In terms of the recovery management agreedwith the bank, the recovery agents should adhere to the policy, procedure, etc. prescribed by

the bank.

1- (BANKING & INSURANCE)


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9oan Recovery /oicy:

he debt collection policy *recovery policy+ of the bank is built around dignity and

respect to customers. he Bank will not follow policies that are unduly coercive in recovery ofdues from borrowers. he policy is built on courtesy, fair treatment and persuasion. he bank

believes in following fair practices with regard to recovery of dues from borrowers and taking

possession of security *properties 8 assets charged to the bank as primary or collateral security+

*known as security repossession+ and thereby fostering customer confidence and long$term

relationship.

he repayment schedule for any loan sanctioned by the Bank will be fi%ed taking into

account the repaying capacity and cash flow pattern of the borrower. he bank will e%plain to

the customer upfront the method of calculation of interest and how the !quated -onthly

Installments *!-I+ or payments through any other mode of repayment will be appropriated

against interest and principal due from the customers. he bank would e%pect the customers to

adhere to the repayment schedule agreed to and approach the Bank for assistance and guidance

in case of genuine difficulty in meeting repayment obligations.

he Banks ecurity (epossession Policy *taking possession of the mortgaged properties

under (!I Act or acquiring the property as non banking asset through enforcement of decree+

aims at recovery of dues in the event of default and is not aimed at whimsical deprivation of the

property. he policy recogni&es fairness and transparency in repossession, valuation andreali&ation of security. All the practices adopted by the bank for follow up and recovery of dues

and repossession of security will be in consonance with the law.

Genera G0i#eine" :

1. (BANKING & INSURANCE)


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All the members of the staff or any person authori&ed to represent our Bank in collection

and 8 or security repossession would follow the guidelines set out below9

he customer would be contacted ordinarily at the place of his 8 her choice and in the

absence of any specified place, at the place of his 8 her residence and if unavailable at

his 8 her residence, at the place of business 8 occupation.

Identity and authority of persons authori&ed to represent the Bank for follow up and

recovery of dues would be made known to the borrowers at the first instance. he

bank staff or any person authori&ed to represent the bank in collection of dues or 8

and security repossession will identify himself 8 herself and display the authority

letter issued by the bank upon request.

he bank would respect privacy of its borrowers.

he bank is committed to ensure that all written and verbal communication with its

borrowers will be in simple business language and the bank will adopt civil manners

for interaction with borrowers.

Normally the banks representatives will contact the borrower between 6766 hrs and

166 hrs, unless circumstances warrant visiting the borrower at odd hours and

occasions. uch circumstances would include continuous irregularity in the accounts.

Borrowers requests to avoid calls at a particular time or at a particular place would

be honored as far as possible.



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he bank will document the efforts made for the recovery of dues and the copies of

communication, if any, sent to the customers will be kept on record.

All assistance will be given to resolve disputes or differences regarding dues in a

mutually acceptable and in an orderly manner.

Inappropriate occasions such as bereavement in the family or such other calamitous

occasions will be avoided for making calls 8 visits to collect dues.

Giving no%ice %o *orro2er" :

;hile written communication, telephonic reminders or visits by the banks

representatives to the borrowers place or residence will be used as loan follow up measures, the

bank will not initiate any legal or other recovery measures including repossession of the security

without giving due notice in writing. he Bank will follow all such procedures as required

under law for recovery 8 repossession of security.

Re'o""e""ion o$ Sec0ri%y :

(epossession of security is aimed at recovery of dues and not to deprive the borrower of

the property. he recovery process through repossession of security will involve repossession,

valuation of security and reali&ation of security through appropriate means. All these would be

carried out in a fair and transparent manner. (epossession will be done only after issuing the

notice as detailed above. 4ue process of law will be followed while taking repossession of the

property. he bank will take all reasonable care for ensuring the safety and security of the

property after taking custody, in the ordinary course of the business.


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O''or%0ni%y $or %e *orro2er %o %a@e *ac@ %e "ec0ri%y :

As indicated earlier in the policy document, the bank will resort to repossession of

security only for the purpose of reali&ation of its dues as the last resort and not with intention of

depriving the borrower of the property. Accordingly, the bank will be willing to consider

handing over possession of property to the borrower any time after repossession but before

concluding sale transaction of the property, provided the bank dues are paid in full. If satisfied

with the genuineness of borrowers inability to pay the loan installments as per the schedule

which resulted in the repossession of security, the bank may consider handing over the property

after receiving the installments in arrears. =owever, this would be sub)ect to the bank being

convinced of the arrangements made by the borrower to ensure timely repayment of remaining

installments in future.

De*% Recovery /roce"":

4ebt recovery processes can be typically of following kinds, each involving different

procedure9

• Di$$ic0% recovery 'roce"" 2ere %e #e*%or" are no% 2iing %o 'ay an# 2o

in%en%ionay re"i"% or avoi# recovery e$$or%": he recovery agent has to follow special

process of recovery against the recalcitrant defaulters, in consultation with the bank.

• A""e%" 'o""e""ion 'roce"": If the recalcitrant debtors do not eventually pay the dues, the

movable assets charged to the bank by way of hypothecation or pledge, can be possessed

by the bank or the recovery agent and thereafter auctioned or otherwise sold to recover

the dues. he detailed procedure for such recovery is discussed later, after e%plaining

the meaning of pledge, hypothecation etc. in another >nit.



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• 9ega recovery 'roce"": he intervention of the court is required to possess mortgaged

immovable property by the bank or its recovery agent. Also if the charged assets do not

e%ist, or the debt is unsecured, the debtor will have to be sued for recovery of the dues

by the bank8recovery agent.

Nora Recovery /roce#0re:

As mentioned above, this procedure will generally apply to the debtors who are willing

to pay the dues with normal recovery process. Based on the above$mentioned regulatory

guidelines, following procedure may be outlined for such recovery. =owever the recovery

agents should follow the bank$specific debt recovery procedure as advised by their principal.

Beo2 are given %e ain r0e" $or a@ing Tee'one Ca" an# vi"i% %o %e #e*%or $or

recovery o$ #0e":

Ma@ing c0"%oer ca":his is the first step in recovery procedure. "ollowing rules should be generally followed9

• 0alls are made from the same number as advised by the bank to the customer.

• he agents disclose his identity and authority at the first instance.



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• he agent contacts the debtor between 6766 hours and 166 hours, unless the special

circumstance of his8her business or occupation requires the bank to contact of a different

time. >nder no circumstances, can the customer be called beyond 2166 hours.

• All calls where the customer becomes abusive or threatening should be appropriately

documented.

• 0ustomers question be answered in full. hey should be provided with information

requested and given assistance in making recovery. -inor issues should be resolved.

• =ow often to call customer8 he purpose of a collection call as to bring to the

0ustomers notice the obligation and to seek a commitment to pay on a specified date.

'nce a promise is elicited a call may be made to serve as a reminder and for

confirmation of payment.

• If the customer is not available during a few calls made by the agent, a message may be

left to an adult family member as followsC Please leave a message that AB0 had called

and request the customer to call AB0 back at the given phone numberC. he message

should not indicate that the customer AB0 has overdue amount , or the call originated

from a (ecovery agency.


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• 4uring visit, the agent should be in proper dress and appearance, or wear the dress

prescribed by the principal and follow the timing and place of the visit as per the

principals or (BI8IBA code, unless otherwise agreed by the debtor e%pressly.

• At the first stance, the agent should utter salutation words *like good morning8eveningD

sir8madam, as per custom of the bank+. he agent should thereafter show his I4 card

and authority given by the principal for debt collection from the debtor.8 'nly after these

initial formalities, the conversation regarding debt collection should start.

• he time of visiting the customer will be generally between 67.66 hours to 21.66 hours.


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.+5 O%er Mo#e" o$ Recovery:

• ;here a certificate has been issued to the (ecovery 'fficer under ub$section of section

1, the (ecovery 'fficer may, without pre)udice to the modes of recovery specified insection 2E, recover the amount of debt by any one or more of the modes provided under

this section.

• If any amount is due from any person to the defendant, the (ecovery 'fficer may

require such person to deduct from the said amount, the amount of debt due from the

defendant under this Act and such person shall comply with any such requisition and

shall pay the sum so deducted to the credit of the (ecovery 'fficer Provided that nothing

in this sub$section shall apply to any part of the amount e%empt from attachment in

e%ecution of a decree of a civil court under section F6 of the 0ode of 0ivil Procedure,

16G *E of 16G+.

- (BANKING & INSURANCE)


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• *i+ he (ecovery 'fficer may, at any time or from time to time, by notice in writing,

require any person from whom money is due or may become due to the defendant or to

any person who holds or may subsequently hold money for or on account of the

defendant, to pay to the (ecovery 'fficer either forthwith upon the money becoming

due or being held or within the time specified in the notice *not being before the money

becomes due or is held+ so much of the money as is sufficient to pay the amount of debt

due from the defendant or the whole of the money when it is equal to or less than that

amount.

*ii+ A notice under this sub$section may be issued to any person who holds or may

subsequently hold any money for or on account of the 4efendant )ointly with any other

person and for the purposes of this subsection, the shares of the )oint holders in such

amount shall be presumed, until the contrary is proved, to be equal.

*iii+ A copy of the notice shall be forwarded to the defendant at his last address

known to the (ecovery 'fficer and in the case of a )oint account to all the )oint holders

at their last addresses known to the (ecovery 'fficer.

*iv+ ave as otherwise provided in this sub$section, every person to whom a notice is

issued under the sub$section shall be bound to comply with such notice, and, in

particular, where any such notice is issued to a post office, bank, financial institution, or

an insurer, it shall not be necessary for any pass book, deposit receipt, policy or anyother document to be produced for the purpose of any entry, endorsement or the like to

be made before the payment is made notwithstanding any rule, practice or requirement

to the contrary.

*v+ Any claim respecting any property in relation to which a notice under this sub$

section has been issued arising after the date of the notice shall be void as against any

demand contained in the notice.

*vi+ ;here a person to whom a notice under this sub$section is sent ob)ects to it by a

statement on oath that the sum demanded or the part thereof is not due to the defendant

or that he does not hold any money for or on account of the defendant, then, nothing

contained in this sub$section shall be deemed to require such person to pay any such sum

or part thereof, as the case may be, but if it is discovered that such statement was false in

any material particular, such person shall be personally liable to the (ecovery 'fficer to

-1 (BANKING & INSURANCE)


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the e%tent of his own liability to the defendant on the date of the notice, or to the e%tent

of the defendants liability for any sum due under this Act, whichever is less.

*vii+ he (ecovery 'fficer may, at any time or from time to time, amend or revoke

any notice under this sub$section or e%tend the time for making any payment in

pursuance of such notice.

*viii+ he (ecovery 'fficer shall grant a receipt for any amount paid in compliance

with a notice issued under this sub$section, and the person so paying shall be fully

discharged from his liability to the defendant to the e%tent of the amount so paid.

*i%+ Any person discharging any liability to the defendant after the receipt of a notice

under this sub$section shall be personally liable to the (ecovery 'fficer to the e%tent of

his own liability to the defendant so discharged or to the e%tent of the defendants

liability for any debt due under his Act, whichever is less.

*%+ If the person to whom a notice under this sub$section is sent fails to make

payment in pursuance thereof to the (ecovery 'fficer, he shall be deemed to be a

defendant in default in respect of the amount specified in the notice and further

proceedings may be taken against him for the reali&ation of the amount as if it were a

debt due from him, in the manner provided in sections 2E, 2F and 27.

•

he (ecovery 'fficer may apply to the court in whose custody there is money belonging to the defendant for payment to him of the entire amount of such money, or if

it is more than the amount of debt due an amount sufficient to discharge the amount of

debt so due. he (ecovery 'fficer may, by order, at any stage of the e%ecution of the

certificate of recovery, require any person, and in case of a company, any of its officers

against whom or which the certificate of recovery is issued, to declare on affidavit the

particulars of his or its assets.

• he (ecovery 'fficer may recover any amount of debt due from the defendant by

distrait and sale of his movable property in the manner laid down in the hird chedule

to the Income$a% Act, 1F1 *H3 of 1F1+.

-- (BANKING & INSURANCE)


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DEBT RECO


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It refers to a sum of money owed by one person or entity *debtor+ to another person or

entity *creditor+. hus there are two parties to a debt$ debtor who receives money by way of a

debt5 and creditor who lends money to the debtor. o illustrate, if (am takes a loan of (s. 3 lacs

from a bank for purchasing a car, (am becomes the debtor *or borrower+, the bank is the

creditor *or lender+ and the loan of (s. 3 laces is the debt *principal+. (am would be required to

repay the loan in equated ,monthly installment *!-I+,comprising the principal and interest,

spread over the repayment period of, say, 3 years * debt tenor+.

Recovery:

It means collection or recovery of money from the debtor by, or on behalf of the

creditor, after it has become due for payment in accordance with the debt terms agreed between

the creditor and the debtor. In the above e%ample, if (am *debtor+ fails to pay the agreed

installment *!-I+ on the due date, the bank may send him notice to remind him to pay the

agreed amount within a stipulated period. If he does not pay even after receiving the notice here

that a debt becomes payable by the debtor only on or after the due date, but not before that date.

If the debt is not paid on the due date it becomes over due or past due.

Agen%:

It is a legal term defined in section 1G2 of Indian 0ontract Act as a person employed to

do any act for another or to represent another in dealings with third personC. he person for

whom such acts are done, or who is represented, is called the PrincipalC. An agent has thus anauthority to do acts on behalf of the principal within the limits of the authority and thereby bind

the principal for such acts in relation to third parties. here are several kinds of agents e.g.

brokers *financial or commodity brokers+, auctioneers, insurance agents, estate or property

agents, commission agent, selling agents, marketing agents, debt recovery agents.

4ebt (ecovery Agent may now be defined as a person or entity engaged by a bank for

the purpose of collecting specified loans, or advances or other kind of dents from the debtors *or

borrowers+ in accordance with the specified terms and conditions. In the above e%amples of the

car loan to (am, if the bank *creditor+ engages K< will be called as 4ebt (ecovery Agent of the

bank.



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CONC9USION

o conclude with, till recent past, corporate borrowers even after defaulting continuously

never had any real fear of bank taking any action to recover their dues despite the fact that theirentire assets were hypothecated to the banks. his is because there was no legal Act framed to

safeguard the real interest of banks.

=owever with the introduction of ecuriti&ation Act, 2662 banks can now issue notices

to their defaulters to repay their dues or else make defaulters face hard and tough actions under

the aforementioned Act. his enables banks to get rid of sticky loans thereby improving their



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bottom lines. Also a hallmark of a good business is approaching it with a fresh, new perspective

and requires management that is fully awake, fully alive and of course fully focused on making

things better.

Also, the passing of the ecuriti&ation Act, 2662 came as a bonan&a

4iscouraged by the results of debtors in filling the coffers of banks, legislature enacted

securiti&ation and reconstruction of financial assets and enforcement of ecurity Interest Act

*securiti&ation act+ Lune 21, 2662 for investors in banking sector stocks that in turn resulted

into an improvement in their share prices. he banks were empowered under section 13*H+ of

securiti&ation act to take possession of secured assets of the borrower including the right to

transfer by way of lease, assignment or sale for reali&ing the secured asset. he role of the

court was limited to challenge the measures under section 13*H+, by way of appeal, that too on

deposit of 7EM of amount claimed on the notice under section 13*2+ of securiti&ation act.



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BIB9IOGRA/

• /RIMAR DATA:

Boo@ Re$erence

=andbook on debt *Indian Institution of banking and "inance+.

Ne2" /a'er"

Business !conomics *.

Documents

Debt Recovery Management in Banks