Title: Legislative framework to tackle non-performing assets in India: law and economic analysis

Authors: Hiteshkumar Thakkar; Gaurang Rami; Pratik Parashar Sarmah

Addresses: Gujarat National Law University, Gandhinagar, Gujarat, India ' Veer Narmad South Gujarat University, Surat, Gujarat, India ' Gujarat National Law University, Gandhinagar, Gujarat, India

Abstract: India has been taking steps to tackle the problem of non-performing assets (NPAs) or bad loans. The paper has tried to analyse the process from a breach of contract point of view. Game theory is used to understand the process wherein the asset is placed with the debtor, who can either cooperate or appropriate. The study focuses on the problems of bad loans and to ascertain in which sector-specific banks (public sector bank, private sector bank and foreign bank), it is significantly higher. It further narrows down the problem of bad loans in sub-sectors (priority sector, non-priority sector and public sector). Though there are various legislative framework to tackle non-performing assets, this paper stresses the effectiveness of Lok Adalats, debt recovery tribunals (DRTs), and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) based on time series data, by putting forth trend regression analysis.

Keywords: non-performing assets; NPAs; bad loans; breach of contract; legislative framework; Lok Adalats; SARFAESI Act; debt recovery tribunals; DRTs; India.

DOI: 10.1504/IJEPEE.2023.131035

International Journal of Economic Policy in Emerging Economies, 2023 Vol.17 No.3, pp.362 - 388

Accepted: 08 Sep 2020
Published online: 22 May 2023 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article