Synopsis

When we consider the term “recovery” it is either a comeback from a

disease or big arrogant muscled men using harsh techniques to get out loan
money from the defaulting borrowers. In Indian terms they are called as
“Vasulliwale”. Hence the concept of recovery was given birth. But today the
recovery is done legally & in a peaceful, polite manner since the banker has
to consider the internal & external factors causing the default. Today the
recovery personnels are better known as Recovery agents. The banks have
faced and are still facing major problems due to these defaulting borrowers,
so recovery of debts as per Banks and Financial Institutions Act 1993 came
into effect on 24th June 1993 and was amended in the year 2000.

The period from 1991-1996 can be considered as a turning point for

the banking industry. The concept of Non-Performing Asset’s was introduced
in parliament on 17th December 1991. For the treatment of an asset as Non-
Performing, the entire period for which the interest and installment remained
uncollected by the bank should be taken note off & even after the bank gives
the defaulter some grace days and repeated reminders the borrower does
not make the settlement, then the matter is settled as per the guidelines of
SARFAESIA Act, 2002 for recovery of bad loans. The recovery methods thus
used are mentioned in this research study as per SARFAESIA ACT, 2002 along
with some loan related aspects.
 Methodol
ogy
The methodology, which has been used for collection of data regarding
“RECOVERY OF LOAN METHODS AND LOAN ASPECTS”, is segregated
below as primary research data & secondary research data.

The primary research data is availed through the visits that I had with
various banks to know their procedure of recovering loans.

The secondary research data has been acquired from newspapers, books,
magazines, internet, friends etc. for banking upon the theoretical as well as
practical knowledge which is related to Recovery of loan methods and loan
aspects.
 Objective
s
The present thesis has been prepared with the following
objectives:

1. To study, the reasons for the loan accounts going bad.

2. To study, how the recovery of the bad loans are done.

3. To study, how banks try to reduce the burden NPAs.

4. To study, how the setting up Asset Reconstruction companies (ARCs) has

helped banks in reducing the load of NPAs.

5. To know, about the new techniques used by banks to erase the birth of
NPAs at inception.

6. To understand, the approach & attitude of the banks towards the growing
level of NPAS.
 Scope
The research done on the subject matter is only constricted to the
recovery methods used by banks in India. The recovery done by all
banks is through the SARFAESIA Act, 2002 as per recent study.