Banking

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 November 2014 I want to ask why there are NPAs in banks? When they are having security against loans then why they cannot realise their security?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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02 November 2014 NPA is on account of non-recovery of dues through normal channels ie repayment through cash flows of the business.

recovery through sale of asset does happen but as per RBi guidelines, it cannot be done unless the account is NPA.

Further, NPA provisions are also made on the basis of availability of security as there is a huge portfolio of loans which is not backed by security and even where security is available, it is not sufficient to cover the whole of the outstanding amount.