NPAs In India
Lessons For Banks Of Bangladesh
Sujayendra Das :
The term Non-Performing Assets (NPAs) is a common phenomenon in financial sector almost all over India. I think the term is also commonly used in Bangladesh. It is pertinent on my part to throw light about this burning issue of India as I hail from that country.
The term 'Non-Performing Assets' is deeply linked with us when we enter into transaction with any bank (whether public sector or private sector) at the time of procuring loan. I assume there are quite good numbers of online readers of both India and Bangladesh who are not well conversant with the above stated term NPA. The term is referred to such loan which remains overdue for a period of 90 days or more or sometimes even borrowers freak away with the money. Now all over India recovering of all NPAs has become an endemic which has caused anxieties among senior management personnel of both public and private sector banks of India. Recently we find from various records that recovery of NPAs has become a common issue which has badly dismantled proper functioning of banks. In this regard there has been a thorough probing by media and investigating agencies of India but we find that actual results have not yielded in its proper perspectives. In this regard the responsibility lies upon borrowers as well as upon senior management personnel of both public and private sector banks of India. Through the initiatives by senior management personnel of both public and private sector banks, NPAs in India are minimised to a greater extent. But still as per expectations, the trend till date is extremely dismal in our mind. Thus in the subsequent paragraph it is my humble task to emphasise at length the way NPA's can be minimised all over India.
How NPAs can be minimised all over India?
The NPA is a common terminology which is deeply connected with banking operation. Now the term NPAs (Non Performing Assets) has become buzz word among business persons along with key households of India. However, there are some ways and means being adopted by all public and private sector banks in India. Among all the ways and means to recover NPAs, some of the common ones are stated as follow:
Official notices are issued by both officials of public and private sector banks to recover NPAs.
Debt Recovery Tribunal is formed.
Compromise Settlement issues are held
Lok Adalat has been set up
Personnel initiatives of borrowers began
Abolishing of political interferences
Constant telephonic conversation between Bank Officials and borrowers held
If judgment takes place as per the basic tenets of law then proper actions are taken against hardcore offenders on account of which they are taken to task severely and finally put behind the bars.
In the recent past there have been instances of NPAs surfacing badly in Indian banking and economic surveys. Two prominent business persons of India borrowed funds from two reputed banks with the objective to expand their businesses but what was distressing to note that those two freaked away with bank's money and now there is no way could be found to nab them. To answer to this situation first of all our politician should be blamed wholeheartedly and taken to task ultimately. But Indian system has become as such that rendering proper judgment is a tough proposition though under exceptional circumstance punishment is also meted out. It is just the way chairman of a reputed private sector bank has been severely taken to task thereby forced her to demit office on account of this massive unethical task.
Types of Non-Performing Assets:
Standard Assets - Standard Assets are such in which the borrowers fail to repay the payment on time.
Sub Standard Assets- Sub Standard Assets are such in which NPAs have been disputed for less than one year
Doubtful Assets- Doubtful Assets are such in which NPAs have been not recovered for more than a year
Loss Assets- Loss Assets are such in which the losses to the Bank (both public and private) are determined by the senior management personnel of each Bank concerned.
Why NPAs take place?
There are various reasons known to us about the occurrence of NPAs all over India. Among all the reasons connected with NPAs some of the common ones are stated as follow:
Flaws in lending norms
Credit issuance mismanagement
Judging by the above stated inference one point has become translucent in our mind NPAs collections should be strengthened so that banking operations should be rejuvenated once again for the benefits of deserving borrowers. Hope, better sense will prevail soon among bankers and public borrowers in the coming days. However, forceful collection of NPAs will not serve any purpose in this regard. Same scenarios like that of the above are noticeable in Bangladesh but the government of that country is deeply cautious in this regard with the objective to streamline the entire operations.
(Sujayendra Das writes from Kolkata)