NPA & SARFAESI

Banking · NPA और SARFAESI · 16 facts

NPA = Non-Performing Asset: loan overdue for 90+ days (interest/principal unpaid)

Sub-standard Asset: NPA for less than 12 months

Doubtful Asset: NPA for more than 12 months

Loss Asset: identified as uncollectable by bank or auditor

Gross NPA: total NPAs before provisions; Net NPA = Gross NPA minus provisions

SARFAESI Act 2002: banks can seize and sell assets WITHOUT court order

SARFAESI = Securitisation and Reconstruction of Financial Assets Act

DRT (Debt Recovery Tribunal): special court for banks to recover bad loans

IBC (Insolvency and Bankruptcy Code) 2016: time-bound insolvency resolution

NCLT handles corporate insolvency under IBC; DRT handles individuals

NARCL (National Asset Reconstruction Company) = Bad Bank, set up 2021

Bad Bank buys NPAs from banks and tries to recover the money

Asset Reconstruction Companies (ARCs) buy NPAs at discount and recover

Wilful Defaulter: borrower who deliberately does not repay despite ability

CRILC: RBI database tracking all borrowers with Rs 5 crore+ exposure

Provisioning: banks must set aside money to cover potential NPA losses