NPA and DRT and ARC Resolutions

A2z Finance is a financial solution company that helps individuals and businesses navigate the complexities of finance. One of the areas of expertise that we offer is in NPA and DRT and ARC Resolutions non-performing assets (NPAs), debt recovery tribunals (DRTs), and asset reconstruction companies (ARCs). In this guide, we will provide you with an overview of these topics, along with relevant subheadings and frequently asked questions (FAQs) to help you better understand these processes and how A2z Finance can assist you in resolving any issues related to them.

Non-Performing Assets (NPAs)

NPAs are loans or advances that are in default, meaning the borrower has failed to repay the principal or interest amount for a specified period. NPAs can be a major concern for lenders as they impact their financial health and profitability. A2z Finance offers the following information and services related to NPAs:

Understanding NPAs

If you are unfamiliar with the concept of NPAs, it is important to understand what they are, the causes behind them, and the different types that exist.

Definition of NPAs

An NPA is defined as a loan or an advance where:

• Interest or installment of principal remains overdue for a period of more than 90 days in respect of a term loan
• The account remains ‘out of order for a period of more than 90 days in respect of an overdraft or cash credit
• The bill remains overdue for a period of more than 90 days in the case of bills purchased or discounted

Causes of NPAs

There can be various reasons behind NPAs, such as the inability of the borrower to repay the loan due to business failure, economic downturns, or poor management.

Types of NPAs

NPAs can be classified into two types:

• Substandard assets: Assets that have remained NPA for a period not exceeding 12 months.
• Doubtful assets: Assets that have remained in the substandard category for a period exceeding 12 months.

Impacts of NPAs on Lenders and Borrowers

NPAs have a significant impact on the financial health and profitability of lenders. Borrowers with NPAs face serious consequences such as legal action, damage to credit score, and inability to obtain future loans.

NPA Resolution Strategies

There are several strategies that lenders can adopt to resolve NPAs. These include restructuring of loans, settlements and compromises, recovery through legal channels, asset sales, and securitization.

Restructuring of Loans

Loan restructuring is a process where the lender and borrower come to an agreement to change the terms of the loan to make it easier for the borrower to repay. This can include reducing the interest rate, extending the repayment period, or changing the repayment schedule.

Settlements and Compromises

Settlements and compromises involve the lender and borrower agreeing to a reduced amount for the repayment of the loan. This can be done either through a lump sum payment or through installments.

Recovery Through Legal Channels

Recovery through legal channels involves taking legal action against the borrower to recover the outstanding amount. This can include filing a lawsuit, obtaining a court judgment, or obtaining an arrest warrant.

Asset Sales or Securitization

Asset sales or securitization involve selling the NPA to a third party that specializes in resolving such issues.

2Z Finance is dedicated to helping individuals and businesses navigate finance complexity. As part of our commitment to providing comprehensive financial solutions, we offer expertise in non-performing assets (NPAs), debt recovery tribunals (DRTs), and asset reconstruction companies (ARCs). In this guide, we will provide an overview of these topics, along with relevant subheadings and frequently asked questions (FAQs).

Non-Performing Assets (NPAs): NPAs are loans or advances that are in default, i.e., where the borrower has failed to repay the principal or interest amount for a specified period. NPAs can be a major concern for lenders, as they impact their financial health and profitability. A2Z Finance offers the following information and services related to NPAs:

Understanding NPAs

Definition of NPAs

Causes of NPAs

Types of NPAs

Impacts of NPAs on Lenders and Borrowers

Subheading: NPA Resolution Strategies

Restructuring of loans

Settlements and compromises

Recovery through legal channels

Asset sales or securitization

Loan write-offs

FAQs 

How can A2Z Finance help resolve non-payable loans?

Debt Recovery Tribunals (DRTs): DRTs are special tribunals in India established under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, for the expeditious recovery of debts from defaulting borrowers. DRTs can issue recovery certificates, seize and sell properties, and take other measures to recover debts. A2Z Finance provides the following information and services related to DRTs: