Page 224 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Unit 15: Management of NPAs by Banks

Members of CIBIL Notes

Banks, Financial Institutions, State Financial Corporations, Non-Banking Financial Companies,
Housing Finance Companies and Credit Card Companies are Members of CIBIL.

Operation of CIBIL

For credit grantors to gain a complete picture of the payment history of credit applicant, they
must be able to gain access to the applicant’s complete credit record that may be spread over
different institutions. CIBIL collects commercial and consumer credit-related data and collates
such data to create and distribute credit reports to Members.

Sources of Information

CIBIL primarily gets information from its Members only and at a subsequent stage will
supplement it with public domain information in order to create a truly comprehensive snapshot
of an entity’s financial track record.
Type of Information Available

CIBIL will be a world-class bureau dealing in both positive information such as total outstanding
group decides feasibility and viability of the proposals in terms of the policies and guidelines
evolved by CDR Standing Forum.

15.4.2 NPA Management – Resolution

1. Compromise and One Time Settlement:
Negotiation
(a) Know your NPAs
(b) Know your borrowal account

(c) Know the history
(d) Know the reasons for loans going bad
(e) Do not try to knock of settlements in one sitting
(f) Finalise compromise amount
(g) Look forward to the borrower fulfilling commitment
If the negotiation and compromise resolutions fail, then the option left with only is to
proceed against the borrower legally to ensure quickest possible action.
2. Restructuring and Rehabilitation: Banks are free to design and implement their own
policies for restructuring/rehabilitation of the NPA accounts. Re-schedulement of payment
of interest and principal after considering the Debt service coverage ratio, contribution of
the promoter and availability of security.

3. Corporate Debt Restructuring: The mechanism of corporate debt restructuring for multiple
banking accounts/accounts under loan syndication/consortium accounts with aggregate
principal outstanding exposure of . 20 cr and above from banks and institutions was
introduced to ensure timely and transparent mechanism for restructuring the corporate
debts on viable entities facing temporary financial difficulties. The minimum exposure
limit of . 20 cr under eligibility criteria includes both fund based and non-fund based
facilities.

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