Non Performing Asset Pdf Download -NPA Short Note Pdf Download Latest news – hello Friends Welcome to .Here We Are Sharing Non Performing Asset and all About NPA . RBI Role In NPA.

Non Performing Asset Pdf Download -NPA Short Note Pdf Download Latest news

Non Performing Asset Pdf Download -NPA Short Note Pdf Download Latest news

A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days. FDI Limits 

  • In case of Agriculture/Farm Loans, the NPA varies for of Short duration crop loan (interest not paid for 2 crop seasons), Long Duration Crops (interest not paid for 1 Crop season).
  • Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.
  • Substandard assets: Assets which has remained NPA for a period less than or equal to 12 months.
  • An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
  • Loss assets: As per RBI, “Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.”

Laws relating to NPA:

  • SARFAESI – The Act empowers Banks/ Financial Institutions to recover their NPAs without the intervention of the court, through acquiring and disposing secured assets in case of outstanding amounts greater than 1 lakh. o Debt Recovery Tribunals (DRTs) and Debt Recovery Appellate
  • Tribunals (DRATs) – The SARFAESI Act provides setting up of DRTs and DRATs for expeditious and exclusive disposal of suits filed by banks / FIs for recovery of their dues in NPA accounts with outstanding amount of Rs. 10 lakh and above.
  • Lok Adalats: Section 89 of the Civil Procedure Code provides resolution of disputes through Alternative Dispute Redressal (ADR) methods such as Arbitration, Conciliation, Lok Adalats and Mediation.

Solutions proposed by RBI:

  • RBI guidelines for restructuring large stressed loans.
  • RBI has directed banks to report to Central Repository of Information on Large Credit (CRILC) when principle/interest payment not paid between 61- 90 days.
  • 5/25 scheme: For existing and new projects greater than 500 crores and also for existing projects which have been classified as bad debt or stressed asset, bank can provide longer amortization periods of 25 years with the option of restructuring loans every 5 or 7 years

 Strategic Debt Restructuring Scheme:

  • Under this scheme, banks are made as majority owners and they will replace the existing management of the ailing company.
  • It gives banks the power to turnaround the ailing company into a financially viable one and recover their dues by selling the company to a new promoter.
  • The scheme provides for creation of Joint Lenders Forum which is to be given additional powers with respect to Management change in the company and to convert existing loans into equity.

NOTES -Non Performing Asset Pdf Download -NPA Short Note Pdf Download Latest news 

Scheme for sustainable structuring of stressed assets (S4A):Green banking Pdf 

  • This allows banks to split the stressed account into two heads – a sustainable portion that the bank deems that the borrower can pay on existing terms and the remaining portion that the borrower is unable to pay(unsustainable).
  • The latter can be converted into equity or convertible debt giving lenders a chance to eventually recover funds if the borrower is unable to pay.
  • This scheme would not only strengthen the lenders’ ability to deal with stressed assets, but would also put real assets back on track, benefitting both banks and the promoters of troubled entities.
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