Answer to Question #160183 in Management for Ps

Question #160183

1.what do you mean by loan recovery Tribunal and Clarify the role of loan recovery Tribunal in reducing the non performing assets?( please provide at least 8 points for role )

2.Explain the effect of loan recovery tribunals in banking?( Please give at least 8 to 10 points for effect)

Expert's answer

Loan recovery tribunal is the body mandated to settle disputes related to cases arising from recovery of loans from clients based on the guidelines provided by banks and other financial institutions. Non-performing assets are increasing in many banks and financial institutions due to the disputes arising between the borrowers and the financial institutions. The loan recovery tribunals help in solving the disputes and borrowers resume paying their loans. Many disputes arise due to changes or increase in the interest rates as opposed to the agreed rate of interest. In such instances, the borrowers might end up defaulting and even stopping their repayment leading to non-performing assets.

Loan recovery tribunals help banks and financial institutions to remain operation through reducing non-performing assets. Through settling disputes, many borrowers will continue repaying their loans, which will enable continuous operations in the banks. Additionally, with many borrowers resuming the repayment of their loans, non-performing assets will reduce leading to reduced bad debts and losses. Many banks could be risking making losses and even closing businesses due to disputes arising from the borrowers leading to increased non-performing assets. Loan recovery tribunals improve mutual relationship between banks and borrowers, which will encourage banks to offer loans and borrowers to continue taking loans and paying on time.

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