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by the borrower. Thus, with the help of ARC banks have security interest under SARFAESI Act etc. Secondly, they
been able to sell hard core NPAs and thereby recover their have to put in place a robust mechanism for early detection
dues to certain extent. In general, such recovery is not of signs of distress and measures for speedy recovery . In
significant since the sale of NPAs takes place at much any case, banks are required to put in further efforts in
lower price. creating awareness on the part of their staff through
education and training.
Some data are shared in Report on Trend and progress of
banking in India 2016-17regarding recovery channels During For loan recovery, it is necessary to develop a conducive
2016-17. Regarding recovery through Lokadalats, the climate for recovery by seeking co-operation from defaulters
percentage of loan recovery from the amount involved and others institutions. There should be coordinated efforts
declined from 4.4 in 2015-16 to 3.6 in 2016-17. But loan by banks and other agencies. Further, recovery function in
recovery through DRTs is quite impressive which is evident banks needs to be reoriented by adopting a professional
from the percentage of recovery from the amount involved approach. More importantly, staff involvement in recovery
which went up from 9-2 in 2015-16 to 24-4 in 2016-17. drive has to be ensured by offering some kind of incentives
to them. Thus, we should consider the loan recovery as a
Ironically, loan recovery under SARFAESI Act is not at all good struggle in which all of us have to participate whole
since the percentage of loan recovered from the amount heartedly and more professionally and by respecting due
involved fell down sharply from 16.5 in 2015-16 to 6.9 in diligence in loan recovery.
2016-17. In aggregate, the percentage of loan recovery
from the amount involved through the above three recovery References:
channels together declined marginally from 10.3 per cent
1. Ministry of Micro Small and Medium Enterprises (2016),
in 2015-16 to 9.8 per cent in 2016-17 Thus, bankers' efforts Fourth All India Survey of MSMEs, Annual Report of
need to be strengthened in respect of loan recovery through Ministry of MSMEs-2015-16, Government of India, Asian
Lokadalats and under SARFAESI Act. Development Bank (2015),Asia SME Finance Monitor

Conclusion: Report -2014
2. Ministry of Micro Small and Medium Enterprises (2016),
The asset quality of banks is one of the most important Contribution of MSME Sector, Annual Report of Ministry
indicators of their financial health. It also reflects the efficacy of MSMEs-2015-16, Government of India,
of banks' credit risk management and the recovery
environment. It is important that the signs of distress in all 3. Nayak Committee Report (1993), Report of the
stressed accounts should be detected early and those which Committee to Examine the Institutional Flow of Credit
are viable are extended the debt restructuring/ revival and to the SSI Sector and Related Aspects, RBI,
rehabilitation support to preserve their economic value. For 4. Report on Trend and progress of banking in India, 2016-
effective management of NPAs, banks have to struggle a 17.
lot on two counts. 5. Revised Guidelines on Revival and Rehabilitation of Sick
MSMEs, RBI Circular, March 17, 2016,
Firstly, recovery from existing NPAs has to be done on a war 6. Shri S.S Mundra (2017), Speech on Bankers and SME
footing by adopting effective strategies such as loan Borrower- The Emerging Mantras, at the 3rd Banks-
compromise in respect of small advances, restructuring of Borrowers Summit, organized by ASSOCHAM, New
viable projects, recovery through DRTs, enforcement
Delhi.
7. Priority Sector Lending Targets and Classification, RBI
Circular, March 01, 2018.
8. Union Budget (2017), Budget Speech 2017-18 by
Finance Minister, Ministry of Finance,
9. Debt Restructuring Mechanism for SMEs, RBI Circular,
September 8, 2005.
10. Framework for Revival and Rehabilitation of MSMEs,
Ministry of MSME, Government Gazette Notification,
May 29, 2015.

38 | 2019 | MAY | BANKING FINANCE