THE ECONOMIC TIMES PRESENTS ‘REMODEL IN INDIA’- ASSET RECONSTRUCTION & NPA MANAGEMENT IN INDIA
REMODEL IN INDIA
At a time when the world is still in the process of emerging from the Great Recession of the 21st century’s first decade, the financial health of each and every economy gains supreme importance and Indian economy is no exception. Credit growth is one of the essential elements that can help achieve this and though a strong and sustainable credit growth is crucial for a healthy and profitable asset creation, it brings with it the dangers of creating stressed assets.
A report released by the Department of Financial Services in the Finance Ministry in March this year pointed out that over 14 public sector banks faced the severity of stressed assets (Non-Performing Assets and restructured loans) of more than 13.03 per cent of their advances on an average in 2014.
Considering the enormous size of the Indian financial industry, this massive increase in its NPAs (Non-Performing Assets) is a cause of serious concern. Stalled projects, delayed policy decisions, economic slowdown and several macro and micro factors related to the supply & demand and mismanagement of funds have been the causes for the same.
Needless to say, a high level of NPAs can be a serious drag on the overall performance of an economy as their management and financial resources are diverted towards the recovery. Read More