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  • Category: Miscellaneous

    Banks can no more declare loans as Non Performing assets

    In a far reaching decision, the Supreme Court ordered the banks that until further order, no loans can be termed as NPA or Non Performing assets and thus the court has stopped the game being played by companies which seek huge loans for development and then turn to be pauper and force the banks to term it as NPA and that is the loss to the banks and also to the nation. The banks survive on deposits from the common man and the banks have no right to say the loans are NPA and there by SC has to intervene and stop this new kind of scam.
  • #709275
    The author has told the truth that the bank is the capital of us general public, which is sometimes ruined in the name of NPA. NPA has increased in the country as a big problem, for this it is very important to prevent its misuse. For this, efforts should be made to make the functioning of government banks more transparent with recapitalization from time to time. Internal audit of government banks should also be done as per CAG's instructions and protection. A property reconstruction company should be formed through parity contribution with the participation of the government and RBI, which can eliminate NPAs from the banking sector. Before sanctioning a loan to a company, its financial condition and feasibility of the project should be objectively examined. The government should rethink whether it has more percentage of ownership in government banks, when their capabilities can be increased by developing banks on PPP model with little bit less ownership.
    Swati Sharma

    Keep your Face to the SunShine

  • #709276
    Excellent decision by the Apex Court. Although I expect that all the issues that might creep up must have been taken care of. DEclaring an asset NPA means the banks get an option to stop giving any more creidt facility to the borrower and also after adue time start recovery process from the borrower by selling its collateral.

    If the process of NPA is removed then some other alternative must have been thought of for complying with previous provisions.
    I think this step with make the lending process even tougher as banks will be wary of giving credit to small borrowers who cannot offer sufficient collateral. Big borrowers may also be asked to offer more collateral than the credit facility offered.

    Seems as good decision but more clarity required for the recovery process in case of failure of a business.

    Live before you leave.

  • #709316
    Many companies take loans and spend them on their whims and fancies. After some time they say they made a loss in their business. They will not pay back the loans and banks will declare the loans as NPAs. In this, the role of some bank officers will also be there. A small business has to make rounds to the bank to get a loan. But a corporate Chairman will never go to the bank. The top officials of the bank will come to him.
    This decision may have a lot of impacts and they may tighten their procedures for sanctioning loans. That is good. A common man who earns a little money and deposits in the bank thinking that it is safe there. But he never knows that his money is not safe there also. Let us hope that a common will get confidence in the Indian Banking system with such decisions by the judiciary.

    always confident

  • #709534
    In the name of the NPA banks were getting it annulled by the RBI or central Govt and everything was going on smoothly for the person who had fled with the loan amount and the bank which facilitated him with that. I think it is a good decision and how the banks are now going to manipulate their balance sheets and profit and loss account is to be seen as that is crucial for the bank's profitability.
    Knowledge is power.

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