In
continuation of my posts in relation to the stressed accounts, I wish to share
my views in regard to the settlement and closure of the account .
Once an account becomes NPA, the recovery
process starts which ultimately leads to the realisation of funds . This is
either done by way of auction of properties , realisation of certain assets ,
recovery from the guarantors and by bringing strategic investor in the company.
In every situation the funds so received are adjusted against the loans
outstanding . Settlement is a very important process which if not handled
properly can cause lot of damages to the borrowers and the guarantors. Most of
the settlements are made in parallel with the legal recovery process. Also if
the settlement is not worked out properly , the amount deposited initially may
be a sheer waste. Hence over commitment can be very dangerous . Also while
doing settlements it must be ensured that it relieves the promoter from any
future liabilities too. Value of intangible assets and business potentials
should also be taken into consideration. We should be well aware about the
maximum time available in settlement.
Since
the legal process of recovery can be too long, it needs to be considered that
both sides get affected in delaying the settlement .
These
days ARCs are also useful for settlement and can play a fruitful role.
CP
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