NPA Management

BY: SHASHI BHUSHAN REG. NO. - 10907626 SECTION Q1R01 ROLL NO. B11

WHAT IS NPA?
Non performing assets.

LOSS BY NPA
TO PUBLIC SECTOR BANK. TO PRIVATE SECTOR BANK.

CATEGORIES OF NPA
SUBSTANDARD ASSETS DOUBTFUL ASSETS. LOSS ASSESTS.

PROVISIONING NORMS
STANDARD ASSESTS - General provision of a minimum of 0.25% .

SUBSTANDARD ASSESTS - 10% on total outstanding balance, 10 % on unsecured exposures identified as sub-standard.

Cont.
DOUBTFUL ASSESTS - 100% to the extent advance not covered by realizable value of security. In case of secured portion, provision may be made in the range of 20% to 100% depending on the period of asset remaining substandard. LOSS ASSESTS - 100% of the outstanding.

STEPS BY BANK TO RECOVER NPA

GROSS NPA SECURITY = NET NPA. SELL OF NPA. GARNISHEE ORDER.

PREVENTIVE MREASUREMENTS FOR NPA

Early Recognition of the Problem. Identifying Borrowers with Genuine Intent. Timeliness and Adequacy of response. Focus on Cash Flows. Multiple Financing.

MEASURES INITIATED BY RBI & GOVT

Compromise Settlement Schemes. Restructuring . Lok Adalat. Corporate Debt Restructuring Cell. Proceedings under the Code of Civil Procedure. Liquidation.

COMPROMISE SETTLEMENT OF SCHEMES

BANK are free to design their own policies for recovery. Specific guide line were issued in May 1999. Guideline are modified in 2000 for recovery of NAPs of Rs. 5 crore and less ass on 31th March 2007.

LOK ADALAT
Small NPAs up to Rs.20 Lacs. Speedy Recovery. Veil of Authority. Soft Defaulters. Less expensive. Easier way to resolve.

CORPORATE DEBT RESTRUCTURING

The objective of CDR is to ensure a timely and transparent mechanism for restructuring of the debts of viable corporate entities affected by internal and external factors. The legal basis for the mechanism is provided by the Inter-Creditor Agreement (ICA). The scheme applies to accounts having multiple banking/ syndication/ consortium accounts with outstanding exposure of Rs.10 crores and above.

PROCEEDING UNDER THE CODE OF CIVIL PROCEDURE

For claims below Rs.10 lacs, the banks and FIs can initiate proceedings under the Code of Civil Procedure of 1908, as amended, in a Civil court. The courts are empowered to pass injunction orders restraining the debtor through itself or through its directors, representatives, etc from disposing of, parting with or dealing in any manner with the subject property. Courts are also empowered to pass attachment and sales orders for subject property before judgment, in case necessary.

BIBLOGRAPHY
http://www.scribd.com/doc/52603402/3/PRO VISIONING-NORMS. www.nirc-icai.org/backgroundmaterial/a101.pp.