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NPA Management: Financial Service and Market Presentation On Management of Non Performing Asset
NPA Management: Financial Service and Market Presentation On Management of Non Performing Asset
NPA Management: Financial Service and Market Presentation On Management of Non Performing Asset
NPA
Management
Fig1:AssetClassification
Assets
• Drain of profit.
Defective Sanction
Lack of Planning No post-sanction
Diversion of supervision, etc
Funds Disputes Delay in releases
Directed lending
within Slow decision
No contribution making process
No
modernization
Improper monitoring
Industrial Relations
Natural Calamities
tyPEs o f
• Gross N PNPA
A :
Gross NPAs are the sum total of all
loan assets that are classified as
NPAs as per R B I guidelines as on
Balance Sheet date. Gross N P A
reflects the quality of the loans made
by banks. It consists of all the non
standard assets like as sub-standard,
doubtful, and loss assets.
• Gross NPAs Gross NPAs
Gross Advances
• Net NPA:
Net NPAs are those type of NPAs in
which the bank has deducted the
provision regarding NPAs. Net NPA
shows the actual burden of banks.
– a. Preventive Management
– b. Curative Management
NPA MANAgeMeNt S t r A t e g i e S
a. Preventive Management - It is rightly
said that prevention is better than cure.
• Developing ‘ K n o w Yo u r Client’ profile
(KYC
• Monitoring Early Warning Signals
• Installing Proper Credit Assessment and
R i s k Management Mechanism
• Reduced Dependence on Interest
• Generating Watch-list/Special Mention
Category
NPA MANAgeMeNt S t r A t e g i e S
b. Curative Management
• Re-phasement of loans
• Pursuing Corporate Debt Restructuring (CDR
• Encouraging rehabilitation of potentially viable
units
• Encouraging acquisition of sick units by healthy
units
• Entering compromise schemes with borrowers
/ Entering one time settlement
NPA MANAgeMeNt S t r A t e g i e S
• Using L o k Adalats for compromise
settlement for smaller loans in “doubtful”
and “loss” category.
• Using Securitization & SARFAESI Act
• Using Asset Reconstruction Company
(ARC)
• Approaching Debt Recovery Tribunals
(DRTs).
• Recovery Action against Large NPAs
• Circulation of Information of Defaulters-
Strengthening Database of Defaulters
S SCBs FY 2007-08 2008-09 2009-10 2010-11
No 2006-07
1 Gross NPAs 2.5 2.3 2.3 2.4 2.3
(%)
2 Net NPAs 1.0 1.0 1.1 1.1 0.9
(%)
Generation
Rate (%)
4 Net 9.2 7.8 8.6 9.1 10.0
NPAs/Net
Worth (%)
S Private FY 2007-08 2008-09 2009-10 2010-
11
No Banks 2006-07