ASSESSING THE EFFECTIVENESS OF BANK RECOVERY LAWS IN INDIA

Abstract

India's banking sector plays a crucial role in the nation's economic growth and development.  However, a significant challenge lies in the form of Non-Performing Assets (NPAs) - loans that are unlikely to be repaid. This phenomenon can threaten the financial stability of banks and hinder credit flow to vital sectors.  Effective bank recovery laws are essential tools for tackling NPAs and ensuring a healthy banking system.

This study delves into the effectiveness of current bank recovery laws in India.  It begins by outlining the importance of a robust legal framework for addressing NPAs.  High NPA levels can lead to decreased bank profitability, reduced lending capacity, and ultimately, impaired financial intermediation. This can stifle economic activity and hinder investment opportunities. The study then provides a concise overview of the key bank recovery laws in India.  This might include the Recovery of Debt Due to Banks and Financial Institutions Act (DRT Act) and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act). These laws establish mechanisms for banks to recover outstanding loans through processes like tribunals, asset reconstruction companies (ARCs), and enforcement of security interests.