Due to multiple financial situations, many organizations face certain kinds of threats related to their assets turning into non-performing assets. With the ridiculous amount of loan taken out, the repayment structure that is in place, and with the interest amount to be paid; it is a horror story in the making.
We can’t stop NPA’s indefinitely but there is a way to minimize and reduce the increasing number of such assets.
Credit Monitoring- It is important to keep the business in check and monitoring their credit limit is very crucial. Cutting the cause from the root and maintaining the pre and post-sanction credit monitoring results in fewer number assets turning into NPA.
Then the priority would be given to the secured creditors who would get the outstanding money then the unsecured creditors would have priority over the trade creditors and lastly the government would be paid. This provided a relief among the creditors and everyone seemed to be on board with this new regulation.
Accountability- Holding the senior as well junior executives accountable is very important because this only helps the government and the banks to tackle the recovery of NPA.
It looks like the system is changing and the rise of entrepreneurs is at a new pace but it is also important to tackle such situations with the utmost dignity and complete transparency because that is how trust is built in this business world.