The NPAs management includes two concepts, which are Prevention and remedy.
Preventive Management:
This contains credit assessment and borrowers rating, earlier than loans commitment. The relationship manager and credit in the bank must be capable to involve on this. Though the information from records of internal or external from agencies such as Credit Information Bureaus (Limited) it is probable avoid likely NPAs.
Remedial Management:
There are various techniques in management to treat issues of NPAs (Pravakar Mohanty, 2006).
NPAs Analysis by segments:
The NPAs required to be analyzed by the priority sector and non-priority sectors, large corporate, agriculture, retail borrowers, small industries industry-wise analysis and state-wise analysis. Research study of seven banks NPAs involved by Pricewaterhouse Cooper’s illustrates that NPAs 23% are in the sector of priority, If 77% of NPAs fit in to non-priority sector. The classification of industry recommended that, Iron and steel, Textiles, Engineering, Chemicals and metals of non-ferrous report for 55% of NPAs. Main part of the NPAs is before small borrowers are from the large borrowers. That analysis by every bank can help in managing NPAs and preventing loss of debt.
Prevention of slippage
Assets of Standard performance should not be permitted to fall into NPAs. Work should be done to for NPAs up gradation into standard assets.