Published in IBA Journal - August 2013

Book Review – ‘Practical Approach to NPA Management’- 3rd Edition (2013)

‘Practical Approach to NPA Management’ by Shri R.C. Kohli, is the 3rd edition of his book ‘Practical approach to Securitistion and Reconstruction of Financial Assets and enforcement of Security Interest Act 2002 and Recovery Management in Banks /Financial Institutions’, which was first published  2005. A revised second edition of this book was published in 2008 titled ‘Practical Approach to Recovery Management in Banks/FIs & Securitisation Act’.

 

Shri Kohli is a retired General Manager of Oriental Bank of commerce. He has vast experience in the field of recovery of bank NPA’s and has been a regular speaker in the various training facilities of different banks.

 

The book updates author’s seminal work on recoveries, related legal issues and pronouncements of various courts on the matters concerning NPAs. The new edition incorporates the latest amendments and judicial pronouncements on SARFAESI Act and DRT ACT.  

 

The most critical issue presently facing Indian banks is that of burgeoning NPAs, which hit banks both by eating into their precious and often scarce capital on one hand and suppressing their profitability parameters on the other hand. This also impacts the banks’ credit ratings, which makes their capital raising efforts that much more difficult.

 

The book has been well planned in its layout and contents. In its first three chapters it deals with the provisions pertaining to enforcement of securities i.e. the provisions and the practical aspect of identification of the accounts, security to which the SARFAESI Act is applicable and the Security Interest Enforcement (Rules). The practical tips for taking action under SARFESI Act are particularly well detailed and would act as an aide memoire to the bankers.

 

The fourth, fifth and the sixth chapters deal with the practical aspect of taking action under SARFESI. The first two deal with the procedures, roles and responsibilities of bank officers seeking to take action under the provisions of SARFAESI Act.

 

The sixth chapter contains FAQ to clarify the doubts on SARFESI, if any, left after the preceding chapters. A chapter on Central Registry introduced recently is a long awaited development envisaged in the SARFAESI Act.

 

Chapters eight, nine and ten of the book deal with different recovery mechanism including the Lok Adalats. Chapter eleven deals with the DRT Act, the exclusive platform created for banks and financial institutions to recover their NPAs. This chapter deals with the practical guidance to the banks officers undertake responsibility of recovering bank’s dues through DRT Act. Chapters twelve and fourteen deal with other avenues of legal recourse for recovery.  Chapter thirteen deals with BIFR Scheme, which most bankers consider a major obstacle in the recovery efforts.

 

Chapter fifteen details the CDR mechanism, a system for handling large corporate exposures of banks. Chapter sixteen describes the process of sale of bank NPAs to securitization and asset reconstruction companies.  The book closes with the last four chapters containing a comprehensive compendium of forms and templates, important case laws and hands-on case studies.

 

The book in its previous two avatars has been well received by the banking community. It is quite certain that the present work, which is quite lucid, will be equally well received in this enlarged and updated edition.  The vast experience of the author has been captured and well documented for the benefit of bankers engaged in the area of recovering banks’ NPAs. Just one word of caution though – NPA management is not only the recovery of banks’ dues by a workout process of realising the value in securities but it also encompasses the rehabilitation process to ensure that the productive assets created from bank finance are not lost to the economy and are resuscitated to tap their full potential.

Book reviewed by

 

Shri Sangeet Shukla,

Senior Advisor (Risk), IBA &

Former Deputy Managing Director,

State Bank of India