Transforming Indian Banks through Asset Quality Management with reference to IBC, 2016
Author(s):
Kalpana Singh, Ravi Pratap Singh
Keywords:
Market intelligence system, stressed assets, Insolvency resolution process, IDRCL, NARCL, loan default cases, Asset Quality Management, Behavioral finance
Abstract
Solution of NPAs is pre-condition for a healthy banking sector. Since the previous mechanisms have proved to be inefficient in this direction, the Insolvency and bankruptcy code is a ray of hope for the banking industry as a whole. These days banks are not just banks dealing in deposits and lending. They are undergoing vast business transformation. They have been encroaching these days into the fields of insurance, share market, trading construction and so on. There has been slow pace of decline in GNPAs & NPAs of public sector banks after 2017-18 and rise in GNPA in case of private sector banks after 2017-18. It indicates stressed assets due to loan default cases, frauds and embezzlements by Mallya, Nirav Modi, Mehul Choksi, Vikram Kothari & so on during 2016-2019 and thereafter the covid impact. Over the year the Government has formulated many mechanisms for recovery of NPAs: Lok Adalat in 1987, Debt recovery Tribunals in year 1993, SARFAESI Act in year 2002 and the latest and most comprehensive is Insolvency and Bankruptcy Code 2013. These activities are bound to have impact on their asset quality. Though, traditionally, NPAs are direct quantitative reflection of their overall performance as well as government policies related to banking, their entry into these diverse activities have led to behavioral and technological implications on their asset quality also. On the one hand, IDC 2016 is a regulatory measure by the government, on the other hand, the banks have made efforts to improve their asset quality on their own in two ways: one is business diversification as per psychology of the market, customers and investors and the second is technological sophistication.
Article Details
Unique Paper ID: 153954

Publication Volume & Issue: Volume 8, Issue 9

Page(s): 280 - 285
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