NPAs of any bank tell its credit risk, asset quality and efficiency of resources allocation. Hence, it's necessary for the bank to reduce its NPAs size. Securitization Act and Corporate Debt Restructuring are helping the banks to curtail the NPAs to a significant level.
The level of Non-Performing Assets (NPAs) is recognized as a critical indicator for assessing a bank's credit risk, asset quality and efficiency of allocation of resources to productive sectors. Reflecting the success of financial sector reforms, regulatory and supervisory process in particular, banks have made substantial progress in cleaning up the NPAs from their balance sheets.
The process of institution building has been strengthened with the implementation of several measures in the areas of debt recovery, asset reconstruction and secretion, besides specific initiatives through recapitalization to enhance the capital base of banks and one time settlement for resolution of NPAs.
The implementation of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) and Corporate Debt Restructuring (CDR) has facilitated resolution of NPAs to a large extent. |
