Volume : V, Issue : II, February - 2016

BANKS’ APPLICATION OF THE NPA RESOLUTION STRATEGIES

Mr. Murali S, Dr B G Satya Prasad

Abstract :

 Any number of strategies have been tried to ing down the distressed assets including the non–performing assets (NPAs) of the banks. The RBI has made it clear that it wants all the banks to clean up their balance sheets by March 2017. It is in this backdrop that the buzzword in banking circles, namely, strategic debt restructuring (SDR) has to be viewed. The other strategies tried by banks earlier on, like the constitution of Asset Reconstruction Companies (ARCs) and enactment of legislations like SARFAESI Act did not prove successful. The defaulters always managed to wriggle out, taking advantage of the loopholes in the mechanism and the legislation. However, with India’s very own power, infrastructure, real estate, steel, cement and IT sectors få no better and made worse by a slowing global economy, the country’s banking system has to act before it is too late. After all banks have funded several projects from the said sectors and the failure of these projects will have serious implications for them. In the circumstances it is necessary to ensure that the SDR programme does not meet the same fate that the other programmes met in the past. Hence the researcher set out to investigate the usefulness of the SDR programme to the financing banks and to identify the precautions the banks should take to optimise the outcome of the SDR programme. The researcher concludes that the banks should be confident of finding a buyer for the assets of the company they intend to acquire under the SDR programme. They should be confident of finding the right management team too to turn the company around. Otherwise, they should not invoke the SDR programme. They have only 18 months to sell their stake to new promoters

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Article: Download PDF   DOI : 10.36106/ijsr  

Cite This Article:

Mr. Murali S, Dr B G Satya Prasad Banks¥ Application of the Npa Resolution Strategies International Journal of Scientific Research, Vol : 5, Issue : 2 February 2016

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