Currently
hottest topic in Banking industry is NPA.
Lot of discussions are going on about why this happened, How this
happened and What should be further course of Action.
One
thing is crystal clear that the Banking sector in India is passing thru a very
crucial phase and need to do a lot to come out of this situation. Another fact
is that the amount of such default account is very high. Considering both the
facts in mind let us discuss about the
ways to handle this mammoth issue. Typically such accounts are written off and
recovery is very less. The route to assign such loans to Asset Reconstruction
Companies (ARCs) has proved more disastrous for the Banks and the Economy of
the country.
One
of the suggestion to handle this chaos is to create a separate bank off such
bad accounts so each and every account can be looked into cautiously and revive
if possible. Also such Bad Bank will have experts of settlement, Revival and Recovery.
Another suggestion almost related to this can be creation of Asset Bank which
owns and monetise each and every part of the Asset of NPA accounts like Land,
Building, Plant & Machinery , Brands, IPRs, Technology Expertise and above
all Human Resource. Such Bank can not only prove a good deal in long run but
also help in retaining the expertise and invisible assets. If this idea is
really put into place there can be a good possibility of recovering the dues.
If such assets are managed by the banks directly in long run they would
definitely be able to revive or recover the dues. Asset disposal if done
properly and slowly without getting panic, will generate substantial
recoveries. It is similar to creating a separate bad bank where the assets can
be Parked and serious efforts are made to solve the issues. Government should
seriously give thought to this idea, after it is question of public money. To
extract better monetisation, separate divisions for visible and non-visible
assets can be created. Asset Bank having technology, brands and IPRs can prove
to be a great venture in long run if handled properly.
C
P Jain, FCA
