When banks and financial institutions give loans, it is called “assets of the bank”. It is because the interest earns by the loan is the earning. However, things become complex when the loan amount is not repaid timely. Thus, not just the interest, but the principal amount also comes under the risk and so as the financial health of the lending company.
It is called Non Performing Assets or NPA. It is a substandard or dubious account that has to be recovered as soon as possible.
Technically, when a borrower fails to pay the dues in the form of principal amount and interest for 180 days, then the loan account is declared as NPA. It is essential to follow npa management to keep the NPA percentage as low as possible.
It is essential to follow all possible steps to keep NPA under control. Among various measures, Debt Advisory is also an essential process.
Debt recovery and debt advisory
There is no doubt that by enhancing debt recovery management, a financial institution can improve the NPA situation. It involves expedition and effective legal, institutional, and judicial activities. As per the legal framework for debt recovery and the Banks and Financial Institutions Debt Recovery Act of 1993 and the Narasimhan Committee supported the Tiwari Committee Report in 1991.
Based on the recommendations of this committee, the government adopted the cutting-edge recovery of debts to banks and financial institutions.
To support and help financial institutions and banks in the debt recovery process Debt Advisory plays a major role. Debt advisors follow a meticulous approach toward advising companies on debt issuance.
It develops an in-depth understanding of the business model. It analyzes funding options and takes into consideration business factors.
Debt Advisory also includes consideration of regulatory and external market conditions, so that making recommendations can be made.
In the past few years, there has been a great improvement in the recovery process of npa in india. Among several methods, Debt Advisory is very much useful and effective. An expert Debt Recovery service can improve the NPA situation significantly and improve the financial health of the lender.