Guidelines for Ethical Engagement of Direct Recovery Agents by Banks and Financial Institutions

IntroductionThe engagement of direct recovery agents by banks and financial institutions necessitates a careful balance between effective debt recovery and the protection of borrowers’ rights. To ensure that recovery practices remain fair, transparent, and respectful, institutions must adhere to regulatory guidelines and ethical standards. Key Considerations in Engaging Recovery Agents 1. Due Diligence Prior to…

Debt recovery through DRT proceedings

The Debts Recovery Tribunals (DRTs) and Debts Recovery Appellate Tribunals (DRATs) were established under the Recovery of Debts and Bankruptcy Act (RDB Act), 1993 with the specific objective of providing expeditious adjudication and recovery of debts due to Banks and Financial Institutions. At present, 39 Debts Recovery Tribunals (DRTs) and 5 Debts Recovery Appellate Tribunals…

Ethical Loan Recovery Policies in Banking

IntroductionIn India, loan recovery is a critical function of banks and financial institutions, aimed at managing and reducing non-performing assets (NPAs). The Reserve Bank of India (RBI) provides comprehensive guidelines that emphasize ethical practices, borrower protection, and transparency in the recovery process. This article explores the key elements of the recovery policy followed by Indian…

Loan Default and Rescheduling in Retail Lending: Implications and Strategies

IntroductionIn the retail lending landscape, timely repayment of loans is essential for maintaining the financial health of both borrowers and lenders. However, due to various unforeseen circumstances, borrowers may sometimes fail to meet their repayment obligations. This article explores the concept of loan default, its consequences, and how loan rescheduling can serve as a preventive…

Definition of NPA and Asset Classifications of irregular loans

(This article  explains the definition of non-performing assets (NPAs), classification of assets, Income recognition, and provisioning requirement under prudential norms for all types of accounts including NPA norms for Agricultural loans and especially KCC) Internationally income from Non-Performing Assets (NPAs) is not recognized on an accrual basis but is booked as income only when it…