If we check overall position of non performing assets in India, it will be directly related to non performing assets of public sector banks, private sector banks, foreign banks and advances to weaker section banks whose published report is given on official site of RBI. Almost all the banks have non performing assets. It means, banks had given loan and advances to businessmen, companies and organisation but still they could not get from them. This issue directly affects the Indian economy adversely . It is estimated that gross NPV of total advances will be 6.33%, it was just 2.33% of total advances in march 2011.
So, RBI has recently taken following steps to control NPA risk of banking sector business. All these steps are admirable.
1. Once an asset is classified as a non-performing one, banks are required to set aside 70% of the amount.
2. Closer supervision on the asset quality.
1. The RBI has issued guidelines to banks for classification of assets into four categories for watching NPA closely.
a) Standard assets:
These are loans which do not have any problem are less risk.
b) Substandard assets:
These are assets which come under the category of NPA for a period of less then 12 months.
c) Doubtful assets:
These are NPA exceeding 12 months
d) Loss assets:
These NPA which are identified as unreliable by internal inspector of bank or auditors or by RBI.
3. One time settlement / compromise scheme
4. Lok adalats
5. Debt Recovery Tribunals
6. Securitization and reconstruction of financial assets and enforcement of Security Interest Act 2002.
7. Corporate Reconstruction Companies
8. Credit information on defaulters and role of credit information bureaus
9. Strengthening of Legal Norm
10. Aligning of prudential norms with
11. international standards
Related : RBI's Balance Sheet Analysis
So, RBI has recently taken following steps to control NPA risk of banking sector business. All these steps are admirable.
1. Once an asset is classified as a non-performing one, banks are required to set aside 70% of the amount.
2. Closer supervision on the asset quality.
1. The RBI has issued guidelines to banks for classification of assets into four categories for watching NPA closely.
a) Standard assets:
These are loans which do not have any problem are less risk.
b) Substandard assets:
These are assets which come under the category of NPA for a period of less then 12 months.
c) Doubtful assets:
These are NPA exceeding 12 months
d) Loss assets:
These NPA which are identified as unreliable by internal inspector of bank or auditors or by RBI.
3. One time settlement / compromise scheme
4. Lok adalats
5. Debt Recovery Tribunals
6. Securitization and reconstruction of financial assets and enforcement of Security Interest Act 2002.
7. Corporate Reconstruction Companies
8. Credit information on defaulters and role of credit information bureaus
9. Strengthening of Legal Norm
10. Aligning of prudential norms with
11. international standards
Related : RBI's Balance Sheet Analysis
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