Our Director, Mr. K.K. Gupta, FCA is a certified Resolution Professional and holds a strong bond with Public & Private Sector Banks, Financial Institutions & NBFCs. Backed by his 38 years of experience KKGA help companies in the One Time Settlement and Debt Re-structuring with Banks and NBFC’s in India. We build a strong relationship with our clients by providing them timely and customized solutions to fulfil their goals.

NPA or Stressed Assets Funding

Before we proceed further, we should know how and why any account becomes an NPA (Non-Performing Asset) or a Stressed Asset of a bank.

When a loan account in a bank stops yielding/making a profit to the bank, or when a borrower of a particular loan account stops repayments or EMI more than or equivalent to three months, then the bank declares that particular account as an NPA. Some scenarios are given below:

• If the borrower fails to make three consecutive EMI payments, the bank will issue a notice of default (Loan Recall Notice).
   
• The borrower can choose to negotiate with the bank through a “debt restructuring” process, or the lender can initiate legal action to recover the outstanding amount under SARFAESI Act, 2002.
   
• In the case of legal action, the lender typically takes possession of any collateral used as security for the loan and initiates liquidation proceedings. This may involve selling assets like factories, houses, or other personal property used as loan security. If the client’s business properties are involved, there is a high risk of complete shutdown.
   
• The bank’s proceedings, including property notices and auction processes, negatively impact the business’s market reputation. This leads to a decrease in the market value of properties, resulting in business creditors resorting to legal measures to recover their money.
   

Even if the customer is consistently making timely payments for all their other debts with the same bank, it is possible for all their loans to be categorized as non-Performing Assets or simply NPA. This is because the Reserve Bank of India (RBI) guidelines require banks to classify NPAs at the borrower level rather than on a loan-by-loan basis. To avoid being labeled as a non-performing asset (NPA), the customer must ensure that all their loan repayments are made punctually.

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