This Presentation is all about measures of recovery management for Banks in India i.e. Legal & Non Legal Measures

1. RECOVERY MANAGEMENT
IN
BANKS
PRESENTED BY: NEERAJ GARWAL

2. • INTRODUCTION
• REASONS FOR DEFAULT
• LOK ADALAT
• DEBT RECOVERY TRIBUNALS
• ASSET RECONSTRUCTION COMPANIES
• DEBT RECOVERY AGENTS
• IMPORTANT POINTS FOR DEBT RECOVERY
• GENERAL GUIDELINES
• CONCLUSION
• REFERENCES
INDEX

3. • Banks need to recover money lent to Borrowers.
• In case it becomes NPA ; Decreases the profitability.
• Recovery: Recovery is defined as the process of regaining and saving something
lost or in danger of becoming costs.
• Recovery Management is thus concerned with designing and implementing a
collection of strategy to recover the debts without losing customer.
• Recovery Management measures:
 Non-Legal
 Legal
INTRODUCTION

4.  Lack of credit evaluation.
 Lack of Follow up measures.
 Default due to natural calamities etc.
 Inadequacy of collateral security/ equitable
mortgage against loan.
Major Reasons Behind Default

5. Non Legal Measures
• Frequent Remainders Like:
Calls
Messages
Mails
Visiting Customer location.

6. LOK ADALATS
• Lok Adalts are created under Legal Services Authority Act 1987.
• It seeks to reduce the number of pending cases relating to recovery of loans as well as dishonour of
cheque cases in various courts.
• Lok Adalat have same powers as civil court under the Code of Civil Procedure while trying a suit in
respect of:
 the summoning and enforcing the attendance of any witness.
 examining him on oath.
 the discovery and production of any document.
 Requisitioning of any public record or document or copy of such record or document from any court or office.
• Lok Adalat shall have no jurisdiction in respect of matters relating to an offence not compoundable under
any law.
• Small value loans up to Rs 20 lakh can be amicably settled between the borrower and the lender

7. • The Recovery of Debts Due to Banks and Financial Institution Act (RDDBFI)
• Enacted in Year 1993
• Act provide establishment of Debt Recovery Tribunals (DRTs)
• Deals in cases of debts above ₹ 10 lakh.
• Procedure of filing application before DRT involve :-
 Filling of Application
 Scrutiny of application by Registrar of DRT
 Issue of summons to borrowers
 Recovery proceedings
• There are currently 32 DRTs in India in 22 unique locations
DEBT RECOVERY TRIBUNALS

8. Asset Reconstruction Companies
ARC in INDIA:
• Reliance Asset
Reconstruction Company
Limited
• Asset Reconstruction
Company (India) Limited
(ARCIL)
• International Asset
Reconstruction Company
Private Limited
• Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest (SARFAESI) Act.
• Enacted in December 2002
• Provides legal basis for the setting up ARCs in India.
• Securitization: Converting a loan into marketable securities.
• Helps the banks to clean up their balance-sheet.
• Banks saves efforts and time by selling bad assets to ARC’s.

9. Debt Recovery Agents
• Debt Recovery Agents (DRA) are representatives appointed by banks and
lawful debt collection agencies to:
 act as their agents
 make calls or visit debtors to collect payments on any kind of past due bill
without violating the regulations implemented by RBI.
• Banks are advised that they should ensure that Debt recovery agent are to
be properly trained
• Agents are also advised to maintain privacy of customer.
Popular
DRA:
• ARRMS
(India)
Private
Limited
• Direct
Recovery
Associates
Inc.
• Cedar
Financial

10. IMPORTANT POINTS FOR DEBT RECOVERY
• Don’t violate or breach the recovery policy, procedure etc. prescribed by the principle.
• Don’t exceed the authority given in the recovery arrangement.
• Don’t make a call to the debtor before 07:00 hours or after 21:00 hours.
• Don’t make anonymous calls or bunched calls to the debtor, which may be perceived as
harassment.
• Don’t conceal or misrepresent your identity during calls and visit or other interaction
with the debtor.
• Don’t show uncivil/indecent/dirty behaviour or use such language during calls and visits
to the debtor.
• Don’t harass/humiliate/intimidate/threaten the debtor- verbally or physically.

11. GENERAL GUIDELINES
• Notice to borrower
• Repossession of security
• Valuation and sale of property
• Opportunity for the borrower to take back the security

12. CONCLUSION

14. REFERENCES
• http://docshare04.docshare.tips/files/28258/282580920.pdf
• http://www.ijirmf.com/wp-content/uploads/2017/02/201702025.pdf
• https://www.slideshare.net/Prateek301/npa-
management#:~:text=With%20effect%20form%20March%2031,in%20respect
%20of%20an%20overdraft%2F
• https://www.indiatoday.in/business/story/explained-why-india-s-banks-will-
face-major-npa-challenge-in-2021-1754119-2020-12-29
• https://www.bankexamstoday.com/2017/02/lok-adalats-all-you-need-to-
know.html#:~:text=DRT%20LOK%20ADALTS,Tribunals%20%2F%20Debt%20
Recovery%20Appellate%20Tribunals.
• https://economictimes.indiatimes.com/topic/NPA/news