Banks generally tend to think of NPAs as unworkable units and thus try to close the account permanently by taking terminal measures.

It’s high time for banks to shed their traditional mindset. They must realize that NPAs are not unworkable units & should consider a fair chance for them. NPA’s are certainly not willful defaulters & they most certainly want to run their business units & repay the credits to the banks. Banks undertaking extreme measures & compelling the NPA’s to liquidate their assets cannot be considered virtuous under any circumstances.

There are situations at times where NPA’s are required to put their residential properties as collateral to the Banks. Once an account is tagged as NPA, the properties are confiscated & are forcefully sold or auctioned to recover the dues. And the properties are sold as Distress Sell, though the real estate prices are always in an ascending manner. The NPA is thus made to suffer a financial loss. It would be right & just to state that Banks are brutally shaking the confidence of the NPA & making them victimized.

To throw some light on this, we will see an example of an NPA who has undergone a similar situation.

A company who was maintaining a healthy account with a bank for a considerable period of time & had taken a loan of a certain amount. It managed to repay more than 40% of it on a timely basis, but unfortunately faced a downturn in its business & was unable to do so for a certain period. The company owners had pledged their residential property as collateral to the bank where the bank tried to confiscate the property & recover the credits. We made a move by filing a case against the bank & succeeded in having a stay against the bank from executing such an action.

The above example in itself testifies that Banks should reconsider the extreme actions & support the NPA’s with Rehabilitation Banks & Management Agreement Contracts as mentioned in the previous blogs.