The most important problem that the Indian banks are facing is the problem of their NPAs. It is only since a couple of years that this particular aspect has been given so much importance. The banks have to overcome these difficulties properly in order to effectively counter the competition faced by the foreign banks. With the framing of laws as per international standards and setting up of Debt recovery tribunal we can say that steps have been taken in this direction.
Banks in India have traditionally been saddled with very high Non-Performing Assets. Banks burdened with huge NPA’s faced uphill tasks in recovering then due to archaic laws and procedures. Realizing the gravity of the situation the government was quick to implement the recommendations of the Narsimham Committee leading to the enactment of the SARFAESI ACT 2002. (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act).
This Act gave the banks the much needed teeth to curb the menace of NPA’s. The non performing assets (NPAs) of banks have at last begun shrinking. As reported from surveys, it is understood that there has been substantial improvements in non performing assets and this has been because of several measures such as formation of asset reconstruction companies, debt restructuring norms, securitization, provisioning norms and prudential norms for income recognition.
We also give our suggestions as to how NPA retrieval can be made easy and in what way the NPA scenario is headed.
The problem is no doubt about recovery management where the objective is to find out about the reasons behind NPAs and to create networks for recovery. Banks of Ahmedabad, Patan & Mehsana have been considered where 20 executive have been approached with a structured question to elicit information.
The crucial factor that decides the performance of banks now a days is the spotting of non-performing assets (NPA). NPAs are those loans given by...