Debt Recovery Management in the Banking Sector, Problems, and Prospect: A Case Study of SBI Bank in India

The Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 (SARFAESI Act) provides access to banks and financial institutions covered under the Act for recovery of secured debts from the borrowers without the intervention of the Courts at the first stage. Securitisation Appeals (SAs) can be filed with the DRTs by those aggrieved against action taken by secured creditors under the SARFAESI Act at Present, recovery is risk of credit on banks. It is also known as credit risk. A bank credit risk has two distinct faces, „quality of risk‟ and „quantity of risk‟. It is observed that the recovery is carried out in the selected banks by adopting following ways General Mechanism All banks operated general mechanism of recovery of NPA, means all primary measures to persuade the defaulting borrowers to repay their over dues like writing letters and sending representatives of the banks to the borrowers for personal visits. Legal Mechanism In case of legal mechanism it is observed that all the selected banks operated this mechanism to the maximum extent involving Debt Recovery Tribunals (DRT), Lok Adalat, Securitization Act, and Compromises (OTS), Write off, Up-gradation and Cash recovery the banking system has been single out among industry, which has heavier regulations than any other economic activities that govern its operation in the system, or its anticipation constituted by laws. But the current banking sector has some constants widely acknowledge arising from non-performance of loan which create a number of factors such as poor management loan policy on income growth and unsound judgment, fraud, forgeries through federal government that set-up the India deposits insurance corporation to protect the interest which most have resulted to problem toward their operation, and it was established by decree No 22 of 1988. So the banking industry has been single to play a specific role in protection the economy growth of due process and development. Also there was a body or union set-up by federal government by decree No 18 of 1994 establishment to failed bank (Recovery of debt and financial malpractice tribunal that were authorized to recover debt owed to failed bank. bank recovery debts and financial malpractice define debts recovery as a means of any loan advances, credit, accommodation guarantees or any other facilities together with the interest rate to show the outstanding unpaid against its customers in favour of the bank recovery debts from the debtors. fund, documentation and credit concentration, which consequently make bank unable to meet its obligation on financial management. Here, the process of Debt recovery Techniques is very useful which ensure that your debtors pay on-time and on another hand, implement the credit policy. ―Debt Recovery techniques‖ is set of policies, checkpoints, expert advisory and legal actions,

1. Designing the policies based on the project, company and other factors 2. Aligning the debt recovery policies with other policies and department 3. To ensure the policy become an integral part of the system 4. Before Sales Analysis 5. Debtor profile analysis 6. Preliminary investigation and discussion with opposite party 7. Preparation of possible proposals with your consent 8. Debt Execution 9. Helping you with next course of action 9. You can check the status at any time on our website A proper synchronization of above activates would assure the complete recovery.

(1) To identify debt recovery techniques in banking sector (2) To indicate debts recovery techniques employed by banks (3) To find out the problem of debts recovery in the banking sector (4) To identify the prospect of debts recovery in the banking sector

Automating statement generation and sending payment notification to customers is a great way to take some burden off the shoulders of debt collection thousands of customised, personalised messages via a customers’ favourite communication channel. Not only does this kind of automation easier at the lending headquarters with minimal paperwork and manual tracking but also saves borrowers a trip or two to make payments physically. To further streamline the process of debt collection, lenders can integrate a UPI payment option into the message they forward to the borrowers, allowing them to make the loan repayment instantly.

A customer-sensitive multi-channel contact strategy helps gather responses from borrowers better than traditional methods. Use of advanced analytics, machine learning, and automation can be used to deliver tailored messages through the customer‘s preferred channels, at considerable time gaps. Investing in data analytics, AI and automation can successfully identify and segment customer types and preferences. The cost of implementing a robust multi-channel strategy remains insignificant when compared to the returns it offers to issuers.

It is true that a customer-oriented collection strategy boosts collection success rate and reduces operating costs. Using self-service capabilities turn around the debt collection processes ad for the better. These kinds of options allow borrowers to follow a do-it-yourself approach for clearing past-due balances. Using creative web tools in a software-as-a-service debt collections model, lenders can improve the customer experience, manage compliance, and automate the collections process through integrating self-service capabilities into the system. Not only does this kind of options help lending companies save money in the long run, but also enhance the customer experience. Speed loan repayments from delinquent borrowers with self-service options.

Many a time loan repayment defaulters relocate without furnishing a forwarding address to the

makes it difficult for a lending company to recover bad debts. Commercial lending businesses can use tech to locate debtors through a reliable tracing service. Making use of multiple data sources like address links, date of birth matching, occupier searching, deceased data, judgement data, telephone and electoral roll, lenders can trace a debtor down and recover bad debts quickly.

Functionalities like CTI allow debt collection agent to pull-up all the data about a particular customer while having a conversation with them. Such features can revamp the way debt collectors handle debt recovery cases.

Lenders often struggle with ways to get customers to repay loans before resorting to extreme measures like a legal intervention. Using scheduled payment reminders such as SMS texts and emails are an easy way to follow up with a borrower. When a debt collector contacts a delinquent customer, they need to keep additional contacts on a strict schedule. Systematic follow-up of borrower‘s accounts reinforces a sense of seriousness and urgency into the customer. Thus, follow up tracking is a less invasive approach to recover debts from borrowers quickly and consistently. 7. Use Debt Recovery Analytics and Account Receivable Scores Lenders need to change the way they feel about unpaid accounts. Instead of referring to them as ‗due collections‘ and ‗bad debt,‘ they need to focus on the entire accounts receivable cycle. Following a holistic approach using Debt recovery analytics and account receivable scores can fetch better revenues. To prioritise delinquent accounts, lenders should apply analytics that brings out both the probability of recovery and the expected monetary amount to be recovered.

It includes research design, sampling framework, methods of data collection, framework of analysis and limitations Review of Literature Kumar (2003) in his paper titled, "The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002", revealed in detail the need, process, summary, positive as well as negative aspects of the Act. Pradhan Tamayo Kumar (2013) observed that of old private sector banks and foreign banks are rising so RBI initiated several measures like self appraisal of different risk management system by banks for introduction of BASEL.

The present study focus on different measures taken by the selected banks in India, with an objective of commonly used recovery methods in public sector banks and private sector banks and hypothesis is framed to know difference between commonly used recovery methods in public sector banks and private sector banks. Keywords: NPA, Legal Mechanism, DRT, Lok Adalat, SBI is studied in detail for the given time period of 2010 to 2014 with its factors, types of assets ,NPA,s in terms of rupees as well as in percentage terms. Along with this findings have also been presented. The above paper indicates that,s for the SBI bank has been rising since 2010 which is a serious note for the bank and bank should take some strick action to avoid it, Proper system of recovery should be done is expected, Loan portfolio should be revived by the bank.

1. http://rbi.org.in. 2 http://www.statebankofindia.com/ 3. Reduction: The New „Mantra‟ of Slippage Management IBA Bulletin, 4. Rastogi R. P. (2002). Financial Management, Golgotha Publication, New Delhi. 5 RBI, ―Report on Trend and Progress of Banking in India, various issues.‖ 6 Masterstroke, The Journal of Master School of Management, ISSN 0972-9895. 7 Sundharam, K.D.S. and Varshney, P.N. (2000). Banking, and financial System, Sultan Chand & Sons

Faculty of Management, PG. Department of Commerce and Business Administration, T.M. Bhagalpur University, Bhagalpur