Published Paper Details:

An asset of a bank turns into a non-performing asset when it ceases to generate regular income such as interest for the bank. These NPAs have serious economic repercussions on the bank in terms of loss of profits, capital and inability to lend as well as on the national economy on a macro level. Therefore, it becomes very important to reduce such NPAs. Once a borrower faces problems in repaying the principal amount or the interest due on a loan amount, the bank may indulge in debt restructuring methods. The legislature has also enacted various laws in order to tackle the rising problem of NPAs for e.g. the SARFAESI Act, the IBC and the RDDBFI. Recently, a Financial Resolution and Deposit Insurance (FRDI) Bill was presented before the Parliament for its approval. Despite such parliamentary measures, a large amount of NPAs still subsists in India, which has an adverse impact on its economic growth. Hence, a robust mechanism needs to be implemented by the Government of India to minimize the loss caused by NPAs to banks and the Indian economy.