Is Selling and Purchasing NPA possible?

Non- Performing Assets or NPA seem to be one of the common things in the business market. Inability to repay the loans renders the asset non-performing.

According to recent changes, apart from the banks, the financial institutions, other investors, and now, there is something known as an e-auction of NPA. So I guess it is possible to take a liable asset and turn it into a profit-making business.

There are certain conditions that auditors need to follow while giving up the asset for sale and purchase like NPA can be considered for selling only if the asset has been rendered non-performing and the profit, as well as the loss account, should be charged if there is a shortfall in the Net Book Value, the bank cannot purchase an NPA which it had originally sold and most importantly before selling off the NPA, the bank should not assume any legal, operational or any other risks related to the sold NPA. The auditors have to abide by the laws and follow certain procedures before putting the asset up for sale.

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