Recovery & Npa Management Policy
1. NPA Recovery & Revival 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 for its recovery and revival
- The Bank should assess and grant the additional working capital requirement so that the borrower can restart its stuck business.
- By compromise, negotiated deal by reducing interest or by waiving penalty so for levied in the account of borrower.
- By converting a portion of Advance of funded term loan levy lower rate to enable the unit to generate income and then to recover.
- 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.
2. Preventive and curative measures can be taken by Banks for containment of NPAs through various measures inter-alia
- Proper credit appraisal
- Identifying the weaknesses of assets through early warning signals
- Up-gradation of assets through various methods
- Recovery of NPAs through compromise settlements, announcement of OTS
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