Abstract:

One of the best measures of a country's banking system's health is the amount of its non-performing assets (NPAs). The growing proportion of NPAs in commercial banks is a significant source of concern for India. Only a robust recovery strategy has the capacity to lower the level of NPAs. The current situation for exploration is centred on the medium of NPA recovery with three significant legal measures. To lessen the burden on those who may lose access to profitable means, significant cases are being taken and mediated through Lok Adalats. Additionally, a programme known as Debt Recovery Tribunals (DRTs) aims to lower the overall amount of NPAs. The Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act) of 2002, which governs the third measure, permits banks to evaluate non-performing assets (NPA). SPSS was used to conduct the analysis for this study, which is based on secondary data. According to the analysis, there is a statistically significant difference between the number of cases that are assigned to the recovery mechanism and the number of cases that are recovered through colourful recovery channels. The study employs existing data and utilizes the statistical soft ware SPSS for analysis. It evaluates the effectiveness of three distinct legal actions in recovering NPAs, with a specific focus on the contrasting outcomes between cases assigned to these recovery mechanisms and those resolved through alternative avenues. The analysis uncovers a statistically significant discrepancy in the outcomes of cases assigned to the NPA recovery mechanisms and those pursued through unconventional recovery methods. This implies that the efficacy of the selected legal actions in addressing NPAs varies considerably. The findings of the study highlight the importance of a multifaceted approach to NPA recovery in India's commercial banking sector. Policymakers and financial institutions should take into account the diverse outcomes achieved through different recovery avenues when devising and implementing NPA recovery strategies. Understanding the strengths and weaknesses of each legal action can lead to more effective solutions for reducing NPAs and upholding the overall well-being of the banking system.

Keywords:

NPAs, debt recovery tribunals, recovery methods, Lok Adalats, and the SARFAESI Act.

How to Cite:

Jeba Samuel PM, Research, R. Shanthi, Professor and Jihen Bousrih. Schedule Commercial Banks' Recovery Mechanism: Focus on Non Performing Assets. [ref]: vol.22.2024. available at: https://refpress.org/ref-vol22-a47/