Measures to Solve Problems of NPA
The problems of blogspot.com//search?q=non-performing-assets-npa-meaning-types">NPA direct hold been receiving greater attending since 1991 inward India. The blogspot.com//search?q=non-performing-assets-npa-meaning-types">Narasimham Committee recommended a number of steps to cut NPA. In the 1990's the Government of Republic of Republic of India (GOI) introduced a number of reforms to deals amongst the problems of NPA.
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Major steps taken to solve the problems of Non-Performing Assets inward India :-
1. Debt Recovery Tribunals (DRTs)
Narasimham Committee Report I (1991) recommended the setting upwards of Special Tribunals to cut the fourth dimension required for settling cases. Accepting the recommendations, Debt Recovery Tribunals (DRTs) were established. There are 22 DRTs together with v Debt Recovery Appellate Tribunals. This is insufficient to solve the work all over the solid soil (India).
2. Securitisation Act 2002
Securitisation together with Reconstruction of Financial Assets together with Enforcement of Security Interest Act 2002 is popularly known equally Securitisation Act. This human activity enables the banks to number notices to defaulters who direct hold to pay the debts inside lx days. Once the expose is issued the borrower cannot sell or dispose the assets without the consent of the lender. The Securitisation Act farther empowers the banks to direct hold over the possession of the assets together with management of the company. The lenders tin recover the dues past times selling the assets or changing the management of the firm. The Act besides enables the establishment of Asset Reconstruction Companies for acquiring NPA. According to the provisions of the Act, Asset Reconstruction Company of Republic of Republic of India Ltd. amongst viii shareholders together with an initial working capital missive of the alphabet of Rs. 10 crores has been laid up. The viii shareholders are HDFC, HDFC Bank, IDBI, IDBI Bank, SBI, ICICI, Federal Bank together with South Indian Bank.
3. Lok Adalats
Lok Adalats direct hold been found suitable for the recovery of pocket-sized loans. According to RBI guidelines issued inward 2001. They encompass NPA upwards to Rs. v lakhs, both adapt filed together with non-suit filed are covered. Lok Adalats avoid the legal process. The Public Sector Banks had recovered Rs. forty Crores past times September 2001.
4. Compromise Settlement
Compromise Settlement Scheme provides a elementary machinery for recovery of NPA. Compromise Settlement Scheme is applied to advances below Rs. 10 Crores. It covers adapt filed cases together with cases pending amongst courts together with DRTs (Debt Recovery Tribunals). Cases of Willful default together with fraud were excluded.
5. Credit Information Bureau
A skillful information organisation is required to foreclose loans from turning into a NPA. If a borrower is a defaulter to 1 bank, this information should endure available to all banks together with thus that they may avoid lending to him. H5N1 Credit Information Bureau tin tending past times maintaining a information banking company which tin endure assessed past times all lending institutions.
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