NPA Resolution and Recovery
Once a loan is an NPA, the routes to recover it: SARFAESI enforcement of security without a court, the Debt Recovery Tribunals under the RDDBFI Act, the Insolvency and Bankruptcy Code with its NCLT process, and settlement routes like Lok Adalats and one-time settlements — with the RBI's stressed-asset framework sitting above all of them.
What you will be able to do
- Describe the SARFAESI route and when a secured creditor can use it without going to court.
- Explain what a Debt Recovery Tribunal does and the Act behind it.
- Outline the IBC process: who can trigger it, the Committee of Creditors, and resolution versus liquidation.
- Match a stressed-account scenario to the most appropriate recovery route.
What is inside this lesson
- 1From classification to recovery
- 2SARFAESI — enforcing security without a court
- 3Debt Recovery Tribunals and the RDDBFI Act
- 4The Insolvency and Bankruptcy Code
- 5Settlement routes and the RBI framework
- 6SARFAESI versus DRT versus IBC
- 7Common confusions
- 8Quick revision
- 9Practice
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From classification to recovery
Classifying a loan as an NPA and providing for it protects the balance sheet, but the bank still wants its money back. Recovery routes fall into three families:
- Enforce the security yourself, outside court — the SARFAESI route.
- Go to a specialised court for a recovery order — the Debt Recovery Tribunal.
- Put the borrower through an insolvency process run by the creditors as a group — the Insolvency and Bankruptcy Code.
Smaller dues are often settled instead — through a Lok Adalat or a negotiated one-time settlement. Above all of these sits the RBI's framework telling banks when they must start resolving a stressed account.
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