Final dissertation llm-rubina muazzam final

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    A dissertation submitted in partial fulfillment of the requirement for award of the

    degree of

    Master of Laws

    Submitted by: - Under the supervision of: -

    Name of student: Rubina Muazzam Faculty name: Ms. Vibha Srivastava

    Roll no. : LS/LM/15/001 Designation: Professor

    Enrolment no:15SLLALLM4003

    School of Law and Legal Affairs

    Noida International University

    Gautam Budh Nagar,

    Uttar Pradesh-India


  • Page 2 of 108


    I, Rubina Muazzam, daughter of Prof. Dr. Mohd. Muazzam hereby declare that the dissertation

    on Indian Banks Big NPA Problem and Debt Recovery Solutions is original work, and it has

    not been submitted, either in part or full, anywhere else for the purpose of, academic or


    Date: Name of student: Rubina Muazzam

    Roll no.: LS/LM/15/001

    Enrolment no.: 15SLLALLM4003

  • Page 3 of 108


    This is to certify that Ms. Rubina Muazzam who is a bonafide student having enrolment No.

    15SLLALLM4003. She is submitting this Dissertation entitled "Indian Banks Big NPA Problem

    and Debt Recovery Solutions" for awarding the degree of Master in Laws. She has worked on

    the above mentioned topic under my constant supervision and guidance to my entire satisfaction

    and her/his dissertation is worthy of consideration for the award of the Degree of Master of

    Laws. As this dissertation meets the requirements laid down by School of Law and Legal

    Affairs, Noida International University, hence, I recommend this dissertation to be accepted for


    Name of Supervisor: Ms. Vibha Srivastava Dr. Pankaj Dwivedi

    Designation: Professor Head of Department

    School of Law and Legal Affairs School of Law and Legal Affairs

  • Page 4 of 108


    On the occasion of the submission of this LL.M Dissertation synopsis on topic Indian Banks Big

    NPA Problem and Debt Recovery Solutions, first of all I humbly pray to almighty God and then

    my respected Father and Mother by whose grace this work has been completed. I express my

    deep sense of gratitude to Dr. Pankaj Dwivedi, HOD, School of Law, Noida International

    University, Noida, whose ideas have always been a source of inspiration for me. His disciplined

    approach towards the life has always motivated me to do a work in a very systematic &

    organized way within the proper time.

    I express my sincere gratitude to the Professor (Dr.) Vikram Singh, the Honorable Pro-

    Chancellor, (former DGP Uttar Pradesh), Vice-Chancellor Professor (Dr.) Kumkum Diwan,

    Registrar, and Directors of all the schools of the University. They have been a source of

    inspiration for me to complete this synopsis. They have been conscious guardian for me. I am

    really grateful to them and remain thank full for their guidance.

    I express my deep sense gratitude to my supervisor Prof. Ms. Vibha Srivastava School of Law &

    Legal Affairs, Noida International University, Noida. She guided me in proper manner by which

    it become possible to work on this issue. I am highly thankful to her.

    I take this opportunity to express my profound gratitude to all the respected teachers of School

    of Law and Legal Affairs. I have no words for the contribution of all my respected teachers and

    staff of my University for their consistent suggestions regarding my Dissertation work, which

    helped me immensely to undertake a long academic journey. Library staff also deserves my

    special gratitude for their kind cooperation.

    Last but not least, I am grateful to all my friends, to have been there with me to encourage, to

    guide and help me out in the difficult moments of my life both in University and outside, during

    the entire course of LLM.

    Rubina Muazzam



  • Page 5 of 108


    ABC: Adjusted Bank Credit

    ABS: Asset Backed Securities

    AFCs: Assets Financing Companies

    ALM: Asset Liability Management

    AMC: Asset Management Company

    ANBC: Adjusted Net Bank Credit

    ARC: Asset Reconstruction Company

    BCBS: Basel Committee on Banking Supervision

    BFS: Board for Financial Supervision

    BIS: Beaureu of international Settlement

    CADP: Common area development programme

    CAPM: Capital Assets Pricing Model

    CAR: Credit Adequate Ratio

    CARE: Credit Analysis and Research Ltd

    CCF: Credit Conversion Factor

    CFSA: Committee on financial sector assessment

    CIBIL: Credit Information Bureau Ltd

    CLO: Collateralized Loan Obligation

    CPs: Commercial Papers

    CPC: Civil Procedure Code

    CRR: Cash Reserve Ratio

    CRAR: Capital Risk Weighted Asset Ratio

    CRISIL: Credit Rating Information Service of India Ltd

    DDP: Dessert development programme

    DEA: Data Envelopment Analysis

    DFI: Development Financial Institution

    DICGC: Deposit Insurance and credit Guarantee Corporation

    DPAP: Draught prone area programme

    DRDA: District rural development agency

    DRT: Debt Recovery Tribunal

  • Page 6 of 108

    DRAT: Debt Recovery Applet Tribunal

    DGA: Duration Gap Analysis

    ECAIs: External Credit Assessment Institutions

    ECGC: Export Credit Guarantee Corporation

    FDI: Foreign Direct Investment

    FI: Financial Institution

    GOI: Government of India

    GTB: Global Trust Bank

    HFC: Housing Finance Company

    IRDP: integrated rural development programme

    IRAC: Income Recognition and Asset Classification

    IRS: Interest rate swaps

    KCCS: Kissan Credit Card Scheme

    KYC: Know your Customer

    LGD: Laws given default

    MBS: Mortgaged Backed Securities

    MFAL: Marginal farmers agricultural labourers

    MOU: Memorandum of Understanding

    MPBF: Maximum Permissible Bank Finance

    MSME: Micro Small and medium enterprise

    NABARD: National Bank for Agricultural and Rural Development Bank

    NBC: Net Bank Credit

    NBFC: Non Banking Financial Companies

    NBFI: Non Banking Financial Institution

    NC: Narasimham Committee

    NGO: Non Governmental Organisation

    NHB: National Housing Banks

    NPA: Non Performing Asset

    OBC: Oriental Bank of Commerce

    OPS: Other Priority Sector

    OSS: Off-Site Surveillance Software

  • Page 7 of 108

    OTS: One Time Settlement

    PACS: Primary Agricultural Credit Societies

    PEO: Programme evaluation Organization

    PLR: Prime Lending Rate

    PSA: Priority Sector Advances

    PSB: Public Sector Bank

    PTC: Private Trust Company

    PCBs: Primary Cooperative Banks

    RFIs: Rural Financial Institutions

    RIDF: Rural Infrastructure Development Fund

    ROA: Return on Asset

    RRB: Regional Rural Bank

    SACP: Special Agricultural Credit Plan

    SARFAESI: Securitization and reconstruction of financial asset and

    Enforcement of Security Interest

    SCB: Scheduled Commercial Bank

    SEB: Salary Earners Bank

    SFDA: Small farmers development agency

    SGSY: Swarna Jayanti Gram Swarozgar Yojna

    SHGs: Self Help Groups

    SIDBI: Small Industry Development Bank of India

    SLR: Statutory liquid Ratio

    SME: Small and medium enterprise

    SPV: Special Purpose Vehicle

    SSI: Small Scale Industry

    STCBs: State Cooperative Banks

    TAFCUB: Task Force for Cooperative Urban Bank

    TGA: Traditional Gap Analysis

    UCB: Urban Cooperative Bank

    VC: Venture Capital

    WPI: Whole Sale Price Index

  • Page 8 of 108


  • Page 9 of 108



    PAGE NO.

    Declaration 2

    Certificate 3

    Acknowledgement 4

    List of Abbreviations 5

    Table of Cases 8

    Chapter 1 Introduction 13

    1.2 Abstract 14

    1.3 present scenario 14

    1.4 classification of NPAs 15

    1.5 Development and Comparisons of

    Banks and Non-Banking Financial



    1.6 Non-Banking Financial Company


    1.7 Cooperative Banking Sector 19

    Chapter- 2 Difficulties With The Non-Performing

    Assets And Review Of Literature And

    Genisis Of Committees.


    2. Difficulties With The Non-

    Performing Assets


    2.2 Review Of Literature And Genisis

    Of Committees


    2.3 Various Committee Reports On



  • Page 10 of 108

    2.4 Various Committee Reports On



    2.5. Conclusions


    Chapter- 3 Comparative Study With Other

    Countries And Scope Of The Study


    3.1 Comparative Study With Other



    3.2 The Need for the Study 48

    3.3 Statement of the Problem