Mounting Bad Loans : Indian Banks

The letter arrived along with hundreds of pages of demand for settlement of business loan against our firm. For small men this is a nerve wrecking event well not only banks loans from any source also is. The worst is money borrowed from private players who charge exorbitant interest and can thug whenever needed especially in case of default.   

Though we cleared money the form owed to the Government many are not so fortunate. The banks are empowered through DRT to recover money through assets owned by the firm or else personal assets. But in spite of stringent laws the amount of  NPAs (Non Performing Assets) are staggering. 

A very massive number of default cases are pending in DRT pertaining to thousands of crores of Rupees. A very large number of cases will never see the end of the day for a meaningful recovery.    

Why does this happening? 

Well I am not a financial wizard hence the question is aimed at the Gurus. But even for the common man can figure out...

Corrupt practices used while disbursing loans.  

Improper assessments of securities.  

The lure of the lucre in case of eager financial institution.

Political proclivity in case of major players. 

Did something like this happen in case of Mallya? Will we know? 

Why are their no secure assets in place with the lending banks?

Hope the riddle is solved on some points. This is public money those responsible for lacunae should be brought to justice and timely.  

Global Economic Scenario - Banks

US economy leaping far ahead of the World crumbles and many banking institutions pack up overnight. The economists are stunned no one could peep through the curtains of corporate offices. What happened?

Bolstered by a strong economy and upward trends, the banking institutions fed the public on easily available loans under presumption that return is no big issue. It was! The country had begun facing the heat with most of the manufacturing moving to Asia, competition in service sector and competition from rising economy like India and China.   

These factors have severely affected the developed World especially Europe. For the banking sector a new paradigm has to emerge in order to manage cash adequacy and mitigate risk factors. This means more regulatory norms and stringent compliance.

Capital Flow inwards is crucial for smaller banks to retain fund adequacy. Sound financial strategies are the order of the day.  For small sized large amount of capital input is a necessity if they have to grow bigger.