12. npa & recovery management

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12. npa & recovery management

  1. 1. BYANIL KUMAR SINHA
  2. 2. NPA ACCOUNTS ARE THOSEACCOUNTS WHICH DO NOT YEILD ANYINCOME OR CEASED TO GENERATEINCOME FOR THE BANK.
  3. 3.  Poor Selection of Borrowers Poor Appraisal Failure of providing timely support Poor follow up and monitoring Hesitation to accept project failure or precipitate PNPA. Government Policies Unforeseen Circumstances.
  4. 4.  Term Loan: Interest and/or installment of principal remain over due for a period of 90 days. Cash Credit/overdraft: Account remains out of order for a period of 90 day. Bills Account: Bills purchased/discounted remain overdue/ unpaid for a period of 90 days. Other Account: A/c Remains overdue for a period of 90 days.
  5. 5. Term Loan: Interest and/or principal remainsover due for two harvesting seasons for shortduration crops.Interest and/or principal remain overdue forone harvesting season for long duration crops.KCC: If account remains out of order for twoharvesting seasons in case of short durationcrops.If account remains out of order for oneharvesting season in case of long durationcrops.
  6. 6. STANDARD: A loan Asset which does not pose anythreat to recovery.SUB STANDARD: NPA up to 12 months. DOBTFUL:Doubtful - I : NPA up to 24 monthsDoubtful - II : NPA up to 48 MonthsDoubtful - III : NPA beyond 48 MonthsLoss Assets : Loss has been identified byBanks Internal/ external/ auditor/ RBI inspector.
  7. 7. willing to pay willing to payable to pay unable to payunwilling to pay unwilling to payable to pay unable to pay
  8. 8.  Lok Adalat Debt recovery Act Orissa and Bihar Money suit or Mortgage Suit. Debt Recovery Tribunal – 1993 Securitization and Reconstruction of Financial Assets and enforcement of Security Interest. (SARFAESI) - 2002 Sale of Financial Assets to Securitization/ Reconstruction Company.
  9. 9. Recovery of Debts Due to Banksand Financial Institutions Act, waspassed by the Government ofIndia (Act 51 of 1993) forexpeditious adjudication andrecovery of debts due to banksand financial institutions.
  10. 10.  The Debts Recovery Tribunal have been constituted under Section 3 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Appointment of Presiding Officer (PO) and Recovery officer. (RO) Setting of DRT Offices.
  11. 11. Authority :• Secured Loan• 10 lac and above• To Auction Defaulters Property Charged to Bank.• To hear Appeal against SARFAESIA.STRUCTURE Presiding officer  High court Judge or Officer of General Manager Rankwith Legal Background. RECOVERY OFFICER Chief Manager of sponsored Bank
  12. 12.  DEMAND NOTICE Valuation Possession Auction For unsecured portion - regular court For Appeal DRAT.
  13. 13.  The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) Empowers Banks and Financial Institutions to recover their non performing assets without the intervention of the Court. The provisions of this Act are applicable only for NPA loans with outstanding above Rs.1.00 lac. NPA loan accounts where the amount is less than 20% of the principal and interest are not eligible to be dealt with under this Act.
  14. 14.  The Act has made provisions for registration and regulation of Securitisation companies or Reconstruction Companies by the RBI, to facilitate securitisation of financial assets of banks, empower SCs/ARCs to raise funds by issuing security receipts to qualified institutional buyers (QIBs), empowering banks and FIs to take possession of securities given for financial assistance and sell or lease the same to take over management in the event of default
  15. 15.  To issue demand notice to the defaulting borrower and guarantor, calling upon them to discharge their dues in full within 60 days. To give notice to any person who has acquired any of the secured assets to surrender the same to the Bank. To ask any debtor of the borrower to pay any sum due or becoming due to the borrower.
  16. 16.  If the borrower fails to comply with the notice, the Bank may take recourse to one or more of the following measures: Take possession of the security Sale or lease or assign the right over the security Manage the same or appoint any person to manage the same
  17. 17.  Appointment of Authorized person. Recall of loan 30 days notice The bank or financial institution may, if it considers appropriate, give a notice of acquisition of financial assets. 60 days. Possession – Immovable Assets, Movable Assets. – Normally 30 days time to file objections. Auction of the property.
  18. 18.  There are many Assets reconstruction Companies to whom Bank Sale its NPA Assets for which SARFAESI Act has spelt out the detail procedure. Some of them are Assets care and Reconstruction enterprises.(ACRE) ARCIL Pridhvi Asset Reconstruction and Securitisation Company Limited (PARAS)
  19. 19. THANK YOU

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