An Effectiveness Assessment of Preventive Management Strategies in order to Manage Non Performing Assets in Indian banks: A Case Study

Abstract

There are two kinds of strategies to control Non Performing Assets i.e. curative and preventive. The paper is an attempt to focus on the effectiveness of various preventive strategies in controlling NPA in future.For this study primary data have been collected from 82 branches out of 138 branches of Sagar District in Madhya Pradesh of India. The respondents are the branch managers or recovery officer of each branch.The primary data are related to the causes of NPA, actual usage of preventive measures and effectiveness of each preventive strategy. It highlights few new causes which are barely covered by the earlier researches. The study also represents the actual usage of various preventive measures along with the effectiveness of preventive measures in averting NPA to be occurred in future. The outcome of this study could provide a valuable insight about which strategy is more effective to prevent these stressed assets. Besides that, it could aware the banking authorities regarding the problems faced by the managers in using the preventive measures.

A Frequency Assessment of Prevalent Prevention Strategies in order to Manage Banks’ NPAs in MSME Loans

“…And second, how can potential NPAs that are already in existence be managed to prevent them from becoming NPAs? Instead of treating NPAs after they have occurred, the pre-emptive steps must be implemented to control them (Meher et. Al.…”

“…The appraisal process can be simple or complex, depending on the purpose and amount of the loan. Banks establish a methodical credit appraisal tactic that is continuously updated in light of changing circumstances (Meher et. Al.,2020;Agarwala 2019;Singh 2013).…”

“…Recent years have seen an increase in bad loans to micro, small, and medium businesses. Curative and preventive measures are both available to control non-performing assets (Meher et al, 2020). The study makes an effort to concentrate on the identification of numerous preventive methods for NPA management in the MSME sector in future.…”