Recovery & Npa Management Policy
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NPA Recovery Steps which can be adopted by the Banks:
Bank has to identify as to how each loan or advance has become NPA and it has to be tackled as a strategy.
- If further assistance will help unit to generate income, then by taking additional collateral security it has to be recovered.
- By asking the borrower to sell surplus assets NPA can be recovered.
- Court or legal proceedings are cumbersome and that have to be resorted only as a last resort.
- By compromise, negotiated deal by reducing interest or by waiving penalty so for levied in the account of borrower.
- By inducting additional partners, promoter’s additional capital, management can be brought in which can turn the unit to be viable.
- By converting a portion of Advance of funded term loan levy lower rate to enable the unit to generate income and then to recover.
- By opening back to back LC encourage unit to do some trading activity which will not need additional funds, but the expertise of the unit can be utilised to generate additional profit and then recover NPA.
- Bank can allow operations in the account when the unit is in bad shape, but retain a small portion to enable it to service the interest and thus unit will not be classified as NPA.
- By declaring unit as wilful defaulter take action, publish in newspaper and coerce the unit to repay.
- SARFAESI / DRT / Coperative Court proceedings.