The issue of Non-Performing Assets (NPAs) in the financial sector has been an area of concern for all economies and reduction in NPAs has become synonymous with functional efficiency of financial intermediaries. Although NPAs are a balance sheet issue of individual banks and financial institutions, it has wider macroeconomic implications. It is important that, if resolution strategies for recovery of dues from NPAs are not put in place quickly and efficiently, these assets would deteriorate in value over time and little value, beyond scrap value would be realized at the end. It should, however, be kept in mind that NPAs are an integral part of the business financial sector players, as they are in the business of taking risk and their earnings reflect the risk they take. They operate in an environment where there would be defaults and also deterioration in portfolio value, as market movements can never be predicted with certainty. It is in this context, that countries have adopted regulatory measures and the structure has been provided by Basel I and II. The book concentrates on the various reasons behind assets turning non-performing and their implications. It also deals with alternative strategies for recovery from such assets. The experiences of some countries, including India, are presented in the book to illustrate the various strategies undertaken.
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