The Impact of SARFAESI Act 2002 in recovering the Non Performance Assets in Public Sector Banks: A study on Recovery in SBI, CBI, CB, BOB and PNB (2008 to 2014)

摘要

The banking sector in India is in a crisis with the increase in burden of bad loans provisioning and the decline in profitability of commercial sector banks particularly Public sector banks. "Bankers are the heart and soul of any business. The economy of the country also mostly depends on the functioning of banking institutions. As per RBI Statistics, annual growth of bank credit in India, which had crossed 30% in the boom years of 2004-2007, has declined to 9.7% in 2014-15 and further to 9.4% in the first half of 2015-16. The decline in credit growth has affect the profitability of scheduled commercial banks, with public sector banks suffering the most in this profit wring. A breather in the form of SARFAESI ACT 2002 was introduced by the recommendation of Narasimham Committee II has been instrumental to recover the identified NPA without intervention of the court. It allows the bank to recover the loan by acquiring/possessing the financial assets pledged or mortgaged with the bankers at the time of availing of loans by borrowers. This paper attempts to study the process and effect of SARFASEI Act 2002 and its impact in recovering the non-performing assets in public sector banks in India. To ascertain the recovery process of SARFAESI Act with the other recovery methods adopted viz; Lok Adalats, DRT and CDR in chosen public sector banks. The study has been made to find out the percentage of recovery made in SARFAESI Act 2002 in compare with Lok Adalat and DRT and also to identify the number of cases referred to the Lok Adalat, DRT & SARFAESI Act 2002 with respect to the banks State Bank of India, Canara Bank, Central Bank of India, Bank of Baroda and Punjab National Bank taken for the study.