The monitoring practices and monitoring systems process is nothing but the effective recovery management.
The Indian banks have not considered the recovery of the loans as the serious issue which leads to the reduction of the NPAs-non-performing assets. The banks should notice that the recovery management of the old and the new loans is one of the essential factors of the Non-performing assets management.
This specific management process must be started within the initial stage of the loan it self and the banks should clearly explain this process to the borrowers before allotting the loans. The effective management of the recovery of the NPAs will have two strategies such as the arresting of the defaults and formation of the non-performing asset, while the second one is the handling of the loan delinquencies.
The individual banks will appoint their own recovery staff in order to process their recovery procedure. The recovery management system is been designed with specific strategies in order to fulfill all the objectives of the banks. By making use of this particular recovery system the banks will be able to recover their pending credits and loans without losing their customers. There are some advantages as well as disadvantages in this recovery process:
- By assigning or allotting the debt or loan recovery process to the outsiders it will allow the officials from the banks to improve or develop more and more effective new businesses
- Within this recovery process because of the third party involvement will save more and more time and will improve or enhance the chances to recover the due payments and this recovery persons are the specialists in dealing with the typical customers and by using this type of people the banks can usually recollect their pending debts in time
- The efficient data collection process may save the cost of the legal proceedings
- The debt collection process is cost effective
- This agency will play the major role in establishing the relationship or communication source between the banks and the customers, if these agents deal in a rude manner with the customers then it may affect the relationship between the banks and the borrowers. So the bank should maintain certain measures and allot some principles to the recovery agents within the process of recovery process.