Role of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 in NPAs Recovery

Abstract

The role of banks in the development of any country cannot be denied, the history of the developed world has witnessed how banks have eased the way for development of developed countries. Banking mainly works on two aspects, obtaining a deposit and secondly securing part of these deposits, giving loan for the remaining part, while giving loan, the bank examines many aspects of the risk scenario, from which loan withdrawal as of the time And at least the risk to the bank. But despite this, in many cases the bank’s loan cannot come back and the account of Borrower becomes unearned, and the loan given by the bank becomes unearned too. These non-performing properties of dacoits today are one of the biggest problems in the world. Today almost all the banks of India are facing this problem, efforts being made by banks and governments are being proven very well. In order to recover these non-existent assets from banks, the banks and the governments had accelerated efforts in the year 1985, for the identification and recovery of these properties, Health Code System was implemented in Banco, in which non-working assets were divided into eight parts. But results of this system were insignificant later on in the year 1993 DRTs were constituted. The success of DRTs was not desirable as a result Government of had to bring more powerful act which is Securitization and reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (Scuritization Act-2002). The NPAs recovery teeth of this act are sharper than Lok Adalat and DRTs. This paper evaluate and the NPAs recovery trend of this act and also highlight success and failure of the Act.

Keywords: Banking, Non-Performing Assets (NPAs), Recovery.

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