RECOVERY MECHANISM OF NON-PERFORMING ASSETS IN INDIAN BANKS

Abstract

A country's economic strength is determined by the strength and efficiency of its financial sector, that is determined by a strong and debt-free financial sector. An intact banking sector effectively mobilizes capital in productive sectors, while a debt-free banking system assures that the financial institutions can meet its depositor obligations. Non-performing assets (NPAs) are considerable origin of trouble for the banks in Indian financial sector. NPAs in banking sector can only be reduced with efficient recovery mechanism and proper credit assessment. In country’s banking system most of the recovery pathways by which banks recover money are discovered to be unsatisfactory. This research work will basically focus on four major recovery channels i.e. Lok Adalat’s, Debt recovery Tribunal, SARFAESI Act and the IBC. The functioning of recovery pathways will be summed up for a period of 10 years from 2012 to 2022.

Keywords: NPA, Recovery Mechanism, Financial system, Economic, SARFAESI Act, Credit Assessment, Lok Adalat.