Professional Documents
Culture Documents
Management
Fig 1: Asset Classification
Assets
• Drain of profit.
Defective Sanction
Lack of Planning No post-sanction
Diversion of Funds supervision, etc
Disputes within Delay in releases
Directed lending
No contribution Slow decision
No modernization making process
Improper monitoring
Industrial Relations
Natural Calamities
tyPEs of NPA
• Gross NPA :
Gross NPAs are the sum total of all
loan assets that are classified as
NPAs as per RBI guidelines as on
Balance Sheet date. Gross NPA
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
• 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 StrAtegieS
a. Preventive Management - It is rightly
said that prevention is better than cure.
• Developing ‘Know Your Client’ profile
(KYC
• Monitoring Early Warning Signals
• Installing Proper Credit Assessment and
Risk Management Mechanism
• Reduced Dependence on Interest
• Generating Watch-list/Special Mention
Category
NPA MANAgeMeNt StrAtegieS
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 StrAtegieS
• Using Lok 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
(%)