Solution:A non-performing Asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
The following initiatives are taken by the government of India to tackle the non-performing assets in their ascending order of chronology:-
(C) Debt Recovery Tribunal (DRT) — 1993-
to decrease the time required for settling cases
They are governed by the provisions of the recovery of debt due to banks and financial institution act 1993.
(D) Credit information Bureau — 2000-
A good information system is required to prevent loans from falling into bad hands and therefore prevention of NPAs.
(A) Corporate Debt Restructuring Act — 2001-
It is for reducing the burden of the debts on the company by decreasing the rates paid and increasing the time the company has to pay the obligation back.
(B) Compromise & settlement — 2001
It provides a simple mechanism for recovery of NPA for the advance below Rs. 10 crores.
(E) SARFAESI Act 2002-
The securitization and reconstruction of financial Assets and enforcement of security assets (SARFAESI) act, the permits bank/financial institution to recover their NPAs without the involvement of the court, through acquiring and disposing of the secured assets in NPA accounts with an outstanding amount of Rs. 1 Lakh and above.