C H A P T E R 1 Introduction Banks were never so serious in their efforts to ensuretimely recovery and consequent reduction of NPAs as theya r e t o d a y .

I t i s i m p o r t a n t t o r e m e m b e r t h a t r e c o v e r y ma na ge me nt, be o f f re s h loans o r o ld loa ns , is ce ntra l to NPA management. This management process needs to starta t the lo a n initia ting s ta ge itse lf. Ef fe c tiv e ma na ge me nt of r ec o v e r y a n d N PA c o m p r i s e tw o p r o n ge d s t ra t e g y. F i rs t r e l a t e s t o a r r e s t i n g o f t h e d e f a u l t s a n d c r e a t i o n o f N P A thereof and the second is to handling of loan delinquencies.The te ne ts o f f ina nc ia l s ec to r r ef o rms we re re vo l utio na rywhic h c re a te d a s e nse o f urge nc y in the minds o f s ta ff o f bank and gave them a message that either they perform or perish. The prudential norm has forced the bank to look into the asset quality.A d e b t f r o m a l o a n , c r e d i t l i n e o r a c c o u n t s receivable that is recovered either in whole or in part after ith a s b e e n w r i t t e n o f f o r c l a s s i f i e d a s a b a d d e b t. Inaccounting, the bad debt recovery would cr e d i t t h e "allowance for bad debts" or "bad debt reserve" categories,and reduce the "accounts receivable" category in the books. 1

Not all bad debt recoveries are "like-kind" recoveries.For example, a collateralized loan that has been written off may be partially recovered through sale of the collateral. Or,a bank may receive equity in exchange for writing off a loan,which could later result in recovery of the loan and, perhaps,some additional profit. Recovery Recovery is defined as the process of regaining and saving something lost or in danger of becoming costs . Recovery is a key to the stability of the banking sector the re s ho uld be no he s ita tio n in s ta ting tha t I ndia n ba nks h a v e d o n e a r e m a r k a b l e j o b i n c o n t a i n m e n t of NonP e rfo rming As se ts ( NP A) co ns ide ring the o v e r a ll diff ic ulte nv iro nm e nt. Rec o ve ry ma na ge me nt is a lso linke d to the ba nk s inte res t ma rgin s we mus t reco gniz e tha t co s t a ndr e c o v e r y m a n a g e m e n t s u p p o r t e d b y e n a b l i n g l e g a l framework hold the key to future health and competitivenesso f t h e I n d i a n b a n k s . N o d o u b t , i m p r o v i n g r e c o v e r y ma na ge me nt in I ndia is a n a rea re quiring e x pe ditio ns a ndeffective actions in legal institutional and judicial processes.B a n k s a t p r e s e n t e x p e r i e n c e c o n s i d e r a b l e d i f f i c u l t i e s i n recovering loans and enforcement of securities charged withthe m. The e x is ting proc e dure f o r rec o ve ry o f de bts due to b a n k s h a s b l o c k e d a s i g n i f i c a n t p o r t i o n o f t h e i r f u n d s i n unp roductive assets, the value of which deteriorates with thepassage of time.

RECOVERY MANAGEMENT IN BANKS The Recovery Officer may, by order, at any stage of t h e execution of the certificate of recovery, require any person,and in case of a company, any of its officers against whomor which the certificate of recovery is issued, to declare onaffidavit the particulars of his or its assets.](5) The Recovery Officer may recover any amount of debtdue from the defendant by distrait and sale of his movablepro pe rty in the ma nne r la id do wn in the Third Sc he dule to the Income-Tax Act, 1961 (43 of 1961). Use of lok adalat T h e H o n o r a b l e S u p r e m e C o u r t a l s o o b s e r v e d t h a t loans, personal loans, credit card loans and housing loanswith less than Rs.10 lakh can be referred to Lok Adalats. Int h i s c o n n e c t i o n , b a n k s ' a t t e n t i o n i s i n v i t e d t o C i r c u l a r D B OD. No. Le g.B C. 21/09. 06. 002/2004- 05 da te d A ugus t 3,2 0 0 4 wherein they were advised to use the forum of L o k A d a l a t s o r g a n i z e d b y C i v i l C o u r t s f o r r e c o v e r y o f l o a n s . Ba nks are advised that they should preferably use the forumo f Lo k A da la ts f o r re co v e ry of pe rso na l lo a ns , c re dit c a rdl o a n s o r h o u s i n g l o a n s w i t h l e s s t h a n R s . 1 0 l a k h a s suggested by the Honorable Supreme Court.Banks, as principals, are responsible for the actionsof their agents. Hence, they should ensure that their agentsengaged for recovery of their dues should strictly adhere tothe above guidelines and instructions.Complaints received by Reserve Bank regardingv io la tio n o f the a bo v e guide line s a nd a do p tio n o f a bus iv e p r a c t i c e s f o l l o w e d b y b a n k s r e c o v e r y a g e n t s w o u l d b e 42

RECOVERY MANAGEMENT IN BANKS v ie we d s e rio us ly. R es e rv e Ba nk may c o ns ide r impos ing a ban on a bank from engaging recovery agents in a particular area, either jurisdictional or

functional, for a limited period. Inc a s e o f p e r s i s t e n t b r e a c h o f a b o v e g u i d e l i n e s . S i m i l a r supervisory action could be attracted when the High Courtso r the S upre me Co urt pa ss s tric tures o r impo s e pe na ltie s against any bank or its Directors/ Officers/ agents with regardt o p o l i c y , p r a c t i c e a n d p r o c e d u r e r e l a t e d t o t h e r e c o v e r y process. 3.5 Programs of bank Credit counseling It is the process of education to borrower about howto avoid incurring debts that cannot be repaid as also how toma na ge the de bts bur de n a nd re pa yme nt co mmitme nts inrespect of a number of debts. This process is actually more 43

RECOVERY MANAGEMENT IN BANKS de bt c o unse ling tha n a f unc tio n o f c re dit e duca tio n. C re ditcounseling often involves negotiating with bank to establish adebt management plan (DMP) for a customer. A DMP mayh e l p t h e d e b t o r r e p a y h i s / h e r d e b t b y w o r k i n g o u t a repayment plan with the bank. DMPs, usually offer reducedpayments, fees and interest rates to the borrower. Recoveryagents refer to the terms dictated by the bank to determinepayments or interest reduction offered to customer in a debtmanagement plan. Debt Management Programs Once a customer has come under a DMP, the bankwill close the customer s various accounts and restrict anyfuture charges in the accounts. The most common benefit of a DMP is the consolidation of multiple monthly payments intoone monthly payment, which is usually less than the sum of the indiv idua l pa yme nts pre v io us ly pa id by the c us to me r.S o m e D M P s a d v e r t i s e t h a t p a y m e n t c a n b e c u t b y 5 0 % , although a reduction of 10-20% is more common. C H A P T E R 4 ICICI bank & its avenue

To understand about this big bank, we need tou nde rs ta nd ho w it be c a me s o big a fo rc e to rec ko n with. 44

RECOVERY MANAGEMENT IN BANKS I C I C I ( I ndus tria l C re dit I nv es tme nt C o rpora tio n of I ndia)promoted the ICICI bank in 1994 with its stake reducing to46% after the IPO in 1998. ICICI is a well-known name inI n d i a a l o n g w i t h IDBI a n d w a s f o r m e d i n 1 9 5 5 a t t h e initiative of the World Bank, Indian Government and IndianI ndus tr ie s. Bo th of thes e ins titutio ns ha v e a n ex ce ptio na lbrand-image and one of the highest possible ratings fromC R I S I L a n d o t h e r r a t i n g o r g a n i z a t i o n s . I C I C I c a n b e c o ns ide re d a n o ligo po lis tic c o rpo ra tio n a lo ng with I DB I.I CI C lis te d in NYS E in 2000. I n 2001 it unde rwe nt a tight m a r r i a g e w i t h B a n k o f M a d u r a i n a s t o c k - o n l y amalgamation. ICICI Bank

(BSE: ICICI) (formerly IndustrialC r e d it a n d In ve s t m e nt C orp o r a tio n of In d ia ) is I ndia 's la rges t priv a te se c to r ba nk in ma rke t ca pita liz a tio n a ndseco nd largest overall in terms of assets. ICICI Bank hasto ta l as se ts of a bo ut USD 100 B illio n (e nd- Ma r 2008) , a ne two rk o f o v er 1308 bra nc he s a nd of f ic es , a bo ut 3950A T M s , a n d 2 4 m i l l i o n c u s t o m e r s ( a s o f e n d J u l y 2 0 0 7 ) . IC IC I Ba nk of fe rs a wide ra nge o f ba nking pro duc ts a ndfinancial services to corporate and retail customers througha variety of delivery channels and through its specializeds u b s i d i a r i e s a n d a f f i l i a t e s i n t h e a r e a s o f i n v e s t m e n t ba nking, lif e a nd no nlif e ins ura nc e , ve nture ca pita l a nda s s e t m a n a g e m e n t . B u t t h e s e d a t a a r e d y n a m i c . I C I C I Ba nk is als o the la rges t iss ue r o f c re dit c a rds in I ndia. . ICICI Bank has listed its equity shares on stock exchangesat Kolkata and Vadodara, Mumbai and the National Stock 45 RECOVERY MANAGEMENT IN BANKS Exchange of India Limited, and it s ADRs on the New YorkStock Exchange (NYSE).The Bank is expanding in overseas markets and hasthe largest international balance sheet among Indian banks.The B a nk no w has who llyo wne d s ubs idia ries , bra nc he sa nd re pre s e nta tive s of f ic es in 18 c o untries , inc luding a no f f s h o r e u n i t i n M u m b a i . T h i s i n c l u d e s w h o l l y o w n e d s u b s i d i a r i e s i n t h e U K , C a n a d a a n d R u s s i a , o f f s h o r e banking units in Singapore and Bahrain, an advisory branchin Dubai, branches in Sri Lanka, Hong Kong and Belgium,a nd re p o ff ice s in the US , C hina , Unite d A ra b Emira te s ,B a n g l a d e s h , S o u t h A f r i c a , I n d o n e s i a , T h a i l a n d a n d Malaysia. In particular, the bank is targeting the NRI (NonResident Indian) populationICICI Bank reported marked-to-market loss of $264million as of January 31, 2008 following the USA subprimemortgage crisis. 4.1 Recovery management of ICICI bank Here how it works

Defaults are classified into two baskets

S o f t a n d Hard.

T h e b o r r o w e r s a r e s e g r e g a t e d i n t o b a s k e t s o n t h e bas is of the time pe rio d of def a ult. The bas ke ts a re 46

RECOVERY MANAGEMENT IN BANKS usually on the basis number on the basis of number of days i.e. 0-30, 0-60, 0-120 and so on. The soft basket is when the default is at early, usuallybelow 90 days. The de f a ult s hif ts into ha rd bas ke t if it is be yo nd 90days. The bank sends reminder mails and makes telephonecalls to the borrower After several reminders if the borrower still shows nosign of paying up then the bank sends an employee toborrower to personally remind him of the re-payment. Even after the notice if the borrower ignores the banksends a legal notice to the borrower. If the borrower ignores the legal notice then the banke i t h e r d e c i d e d t o w r i t e o f f t h e a m o u n t o r r e c o v e r t h e amount. The recovery process is most of the times outsourcedto an external recovery agency. T h e r e c o v e r y a g e n c y s e n d s i t s r e c o v e r y a g e n t s t o collect the money from the borrower, under the supervisionof the bank. T h e r e c o v e r y a g e n c i e s u s u a l l y g i v e t h e b o r r o w e r a s tipula te d time pe rio d within whic h the a mo unt ha s to be repaid back.

In some cases, if the bank decides to use SARFAESI,2002, then the recovery agency has to seize the assets of the borrower. 47 T he re c o ve r y a g e nts e i th e r m a na ge to ma ke t he borrower p a y b a c k t h e m o n e y o r i f t h e S A R F A E S I A c t comes into play then they auction off the seized assets of the borrower and pay the bank.NOTE: I f bo rro we r didn t re ply f o r ba nk no tic e , he nc e thes ec uritiz a tio n a nd rec o ns truc tio n of f ina nc i a l as se ts a ndenforcement of security interest act, 2002 (securitizationact) comes into play. Securitisation act of 2002 Discouraged by the results of debtors in fillingthe coffers of banks, legislature enacted securitization andr e c o n s t r u c t i o n o f f i n a n c i a l a s s e t s a n d e n f o r c e m e n t o f sec urity interest act (securitization act) w.e.f. 21st day of J u n e 2 0 0 2 . T h e b a n k s w e r e e m p o w e r e d u n d e r s e c t i o n 13( 4) o f s ec uritiz a tio n ac t to ta ke po ss ess io n o f s ec ure dassets of the borrower including the right to transfer by wayof lease, assignment or sale for realizing the secured asset.The role of the court was limited to challenge the measuresunder section 13(4), by way of appeal, that too on deposito f 7 5 % o f a m o u n t c l a i m e d o n t h e n o t i c e u n d e r s e c t i o n 13(2) of securitization act. 4.2 Article ICICI Bank fined Rs500, 000 for rough recovery methods A consumer commission has ordered ICICI Bank, thec o u n t r y s l a r g e s t p r i v a t e s e c t o r l e n d e r , t o p a y a f i n e o f Rs 500, 000 for use of force by the bank s recovery agent on 48

RECOVERY MANAGEMENT IN BANKS a defaulting customer. The client who defaulted on loan hada p p r o a c h e d t h e c o n s u m e r a f f a i r s c o m m i s s i o n i n D e l h i compl aining of use of force by the bank s recovery agents.H e a l l e g e d t h e r e c o v e r y a g e n t s i m p o u n d e d h i s ve

hicle and beat a friend s son with iron rods, mistaking himas the defaulter.The D e lhi C o ns ume r C o mmis s io n ha s o rde re d the b a n k t o p a y t h e c o m p l a i n a n t , T a p a n B o s e , R s 5 0 0 , 0 0 0 compensation. (With register to required aren t and outfitsindependent are agents the methods. Recovery regardingI ndia o f B a nk R ese rv e the guide line s s tric t de s pite hire scountry across)Other big lenders like Citibank and HDFC Bank havealso dealt with consumer complaints about the strongarmta c tic s of reco v e ry a ge nts. The ba nks of te n dis miss the recovery agents when confronted with such complaints.Earlier, an ICICI Bank customer in Mumbai committedsuicide after alleged harassment by recovery agents. Thebank later paid his family compensation of Rs15 lakh.B a nks s uf fe r the highe s t de f a ult ra te s o n its "s ma ll-ticket personal loans" that are usually below Rs50,000. Therates of default on these loans are 10 per cent, compared to2 per cent for credit card defaulters and 1.5 per cent for car loans. The bank is reducing its exposure in the segment--itnow has around 3 million such loans. Banks often run into 49 RECOVERY MANAGEMENT IN BANKS tro uble whe n re co v e ry a ge nts ta rge t de f a ulte rs f o r the s e recoveries.

RECOVERY MANAGEMENT IN BANKS voice pitch), and body language (body position, bodymovement) All or any of these elements of non-verballanguage communicate some message (whether intended or unintended by the communicator) to thereceiver.F o l l o w i n g a r e t h e m a i n p r i n c i p l e s o f e f f e c t i v e communication, which could be followed by a recovery agent(communicator) in communication with the debtor (receiver).

T h e a g e n t s l a n g u a g e ( v e r b a l a s w e l l a s b o d y la ng ua ge ) s ho uld be c iv il a nd c o urteo us , as pe r the bank-specific requirement. The objective of the communication should be clear. T h e l a n g u a g e u s e d s h o u l d b e c l e a r s i m p l e a n d cour teous. The language used should be easily understood by thereceiver. T h e a g e n t s h o u l d b e w a t c h f u l a n d s e n s i t i v e t o t h e receiver s responses (including his/her body languageas mentioned above). Make sure that the non-verbal communication (or bodyl a n g u a g e ) i s n o t a d v e r s e t o d e b t o r , t h o u g h unintentional 2) Listening skill: Listening is another skill which is recovery in process.A good recovery agent should be a good communicator anda g o o d l i s t e n e r . L i s t e n i n g r e f e r s t o a l l t h e w a y s i n w h i c h co mmunic a tio n is be i ng rec e ive d f ro m the o the r pa rty a ndincludes not only hearing but also facial body expressions, 58

RECOVERY MANAGEMENT IN BANKS a tte ntiv e ne ss o r lac k of it. F o llo wing a re the re quis ite s of good listening, which help improve communication and makeif effective: Hear attentively to what the debtor is saying. One mayhear, but not listen, if he/she is distracted or inattentive. Lack of listening conveys lack of regard/ respect for thecommunicator; hence it should be avoided.

Do not show impatience or haste while listening to thedebtor. You may lose some important information thedebtor washes to say. Do not show anger or disapproval, or other such facial/body expression, while listening to the debtor s poit of view. N o r m a l l y , c o m m e n c e s p e a k i n g o n l y a f t e r t h e o t h e r party has finished speaking or making a point. Normallydo no t inte rrupt. I n o the r wo rds , inte rrupt o nly whe na b s o l u t e l y n e c e s s a r y , e . g . w h e n t h e p o i n t s b e i n g s po ke n a re irre le v a nt o r bec o ming unduly le ngthy o r controversial and time is limited or is being exceeded.Also interrupt softly by saying words like excuse me. 3) Inter-personal skill: Inter-personal skill refers to communication plus skillthat enhances the relationship and understanding betweent w o o r m o r e p e r s o n s . I t t h u s i n c l u d e c o m m u n i c a t i o n a n d listening skills, plus something more . This something more wo uld be e x pla ine d he re . Ge ne r a lly, pe rs o n re la te to ea c hother favorably when they find support to their dignity, self-res pe c t, s e lf -e s tee m, ide as a nd v a lue s. Es ta blis hing goo d 59

RECOVERY MANAGEMENT IN BANKS inter-personal relationship with a person means establishinga rapport with that person. Any transaction that enhancesthe self would be helpful for better inter-personal relation.Conversely, any transaction that diminishes the self is likelyto disturb the inter-personal relation. For instance, when arecovery agent assumes a posture of superiority and belittlesthe debtor in the communication process, the recovery agentis really making the recovery difficult. Many recovery agentswho thin k o the rwis e a nd c ommunic a te / be ha v e r ude ly o r h a rshly in recovery process may turn out to be mostlycou nterp r o d u c t i v e o v e r a l l . F o l l o w i n g a r e s o m e o f t h e elements of inter-personal skill for recovery agent :

Communicate and listen properly and effectively,as described in the preceding paragraph. Show empathy and respect to other party, not withs t a n d i n g t h e f a c t t h a t h e / s h e d e b t o r t o t h e pri ncipal. D o no t ma ke the de bto r f e e l a nx ious / ins ec ure /threatened by your communication verbal or nonv e r b a l . O n t h e c o n t r a r y , t r y t o r e m o v e s u c h apprehensio n, if any, of the debtor. G i v e a l l t h e i n f o r m a t i o n t h e d e b t o r a s k s f o r i n connection with the debt and its repayment. Thiswo uld he lp imp ro v e inte rpe rs o na l re la tio n a ndalso the recovery prospects. 2) Persuasive skill: 60

RECOVERY MANAGEMENT IN BANKS loan/advances agreements entered between the lenders andcreditors. Thus the receivables in a loan/advances accountconnote the following essential features:1) Ex is te nc e of lo a n o r a dv anc e a gre e me nt be twe e n the creditor and debtor.2)Due date on or after which the obligation is required tobe discharged by the debtor in favour of the creditor.In terms of the arrangement between the creditor banka n d t h e d e b t r e c o v e r y a g e n c y t h e f o r m e r a u t h o r i z e s t h e a g e n t t o c o l l e c t s p e c i f i e d r e c e i v a b l e s f r o m t h e n a m e d de b to rs o n o r af te r the s pec if ie d due da te s. The re qui re dpa rtic ula rs o f the de bto rs a nd rec e iva ble s to be co llec te dfrom them are furnished by the bank to the agent, along withcopies of the relative loan agreements.Thus

the de bt re co v e ry a ge nt is le ga lly a utho riz e d tocollect the specified receivables from the debtors on behalf of the principal: 1) The loan agreement, and 2) The debt collection agency agreement.The procedure and processes of debt collection, codeo f c o n d u c t i n c o l l e c t i o n p r o c e s s a n d o t h e r r e g u l a t o r y requirements that need to be complied with by the recoveryagents are discussed in subsequent units. Remitted collected funds: The f unds co llec te d f ro m the de bto rs s ho uld be s e nt deposited by the agent to the creditor periodically as per thea ge nc y a rra nge me nt. S ta te me nt of c o lle c tio ns re mitte d 63

RECOVERY MANAGEMENT IN BANKS should also be sent along with the remittance, preferably induplicate and the copy acknowledged by the bank be kept onr e c o r d b y t h e a g e n t , i n c h r o n o l o g i c a l o r d e r , f o r f u t u r e reference. These statements of remittance will from the basisof claiming the agreed fee or commission by the agent fromthe principal in due course. Book keeping of recovery management: W hile ea c h de bt reco v e ry a ge nt ma y de v ise his /he r own accounting and book keeping methods, he/she has tot a k e c a r e o f t h e r e p o r t i n g r e q u i r e m e n t s o f i t p r i n c i p a l . Further, book-keeping has to be sperate for each principal.I T f o llo wing wo uld c o ns titute the minimum re quire me nt o f book-keeping for a recovery agent. 1) Lists of debtors received from the principal: C o llec tio n of rec e iva ble s is a n go ing a c tiv ity o f a re co v e rya ge nt who ma y rec e iv e the de bto r lis ts f ro m the princ ipa lfrom time to

time. The debtor lists from the basis of agent sactivities and also the bookkeeping required. These shouldtherefore be carefully kept on record in chronological order. 2) Ledger account of each debtor: Showing the amountsof receivable collected and balance to be collected should bek e p t i n c h r o n o l o g i c a l o r t h i s c a n b e m a i n t a i n e d i n thec o m p u t e r a l s o . I t m a y b e n o t e t h a t a l l t h e collections/recoveries should be remitted to the a bank.Normally agent cannot adjust its dues on a c c o u n t o f f e e against the recoveries made on behalf of the bank. 3) Copies of loan/advances: A gre e me nts be twe e n the debtors and the bank is obliged to keep confidentiality of its 64

RECOVERY MANAGEMENT IN BANKS customer s accounts and recovery and these should not bediv ulge d to third pa rtie s witho ut the c us to me r s s e nt. A ss uc h, a de bt re co v e ry a ge nt mus t ta ke a ll due c a re to therequired privacy and confidentiality as regards the records of e a c h d u e f u r n i s h e d b y t h e b a n k a n d a l s o a s r e g a r d s t h e collections made remitted by him to the principal. 65

RECOVERY MANAGEMENT IN BANKS After this Kaushik had no option to go to his local policestation and lodge a complaint against that person, and Mr.Kaushik have also decided to put a case against that personand HDFC bank in consumer court as well as civil court.K a u s h i k h a s a l s o p o s t e d a c o m p l a i n t w i t h H D F C G

rievance cell, docket no. TF22534017.Kaushik requests the concerned authority to take someaction on this. ABC bank: ABC Bank had granted a personal loan of Rs. 60,000t o X Y , a l o w e r m i d d l e c l a s s i n d i v i d u a l , f o r c o n s u m p t i o n ne e ds . The loa n wa s to be re pa id in ins ta llme nts by X Y. The loan was without any tangible security and also withoutany third party guarantee. The borrower XY could not repayin time s o me ins ta llme nts a nd the re fo re the lo a n bec a me overdue.T he AB C B a nk ga ve X Y s C as e to Z re co v e ry a ge nt,along with other overdue loans for recovery. The Z recoveryagent called XY a couple of times and also visited him at hisr e s i d e n c e . A s X Y w a s n o t a b l e t o r e p a y t h e a m o u n t i n de f a ult, Z , us e d a bus ive a nd ha rs h la ngua ges in f ro nt o nX Y s wif e a nd da ughte rs to ma ke rec o very. D uring o ne of t h e v i s i t s t o X Y s h o u s e , Z a n d h i s c o l l e a g u e s t o o k a w a y forcibly some of the things that were available in XY s housein front of his wife and daughters and also used threateningl a n g u a g e f o r p a y m e n t o f t h e d u e s . X Y f e l t v e r y m u c h h umilia te d a nd a ls o de pre ss e d. Be ing una ble to re pa y the 67

RECOVERY MANAGEMENT IN BANKS dues. XY committed suicide. He left a suicide note, blamingZ for harassing him endlessly. He mentioned the abuses hehad suffered at the hands of Z before his wife and daughters.He also mentioned the threat Z gave that he would suffer direconsequences if he failed to repay the overdue amount.F o l l o w i n g t h e s u i c i d e d e a t h o f X Y , t h e l o c a l p o l i c e a rre s te d Z a nd his co llea gue s ( who us ed to ac co mpa ny Z d uring his v is its to X Y s ho us e) o n c ha rges of a be tme nt o f suicide. A case was also filed against the ABC Bank, whichh a d t o p a y a n e x -

g r a t i a p a y m e n t o f R s . 2 0 l a k h s t o t h e deceased s family. The incident has also been published inthe press and has damaged the Bank s reputation in publiceye, at least for the time being. 68 RECOVERY MANAGEMENT IN BANKS Conclusion To conclude with, till recent past, corporate borrowerseven after defaulting continuously never had any real fear of bank taking any action to recover their dues despite the factthat their entire assets were hypothecated to the banks. Thisis because there was no legal Act framed to safeguard thereal interest of banks.H o we v e r with the intro duc tion o f S ec uritiz a tio n Ac t,2002 banks can now issue notices to their defaulters to repayt h e i r d u e s o r e l s e m a k e d e f a u l t e r s f a c e h a r d a n d t o u g h ac tions under the aforementioned Act. This enables banks toget rid of sticky loans thereby improving their bottom lines.Also a hallmark of a good business is approaching it with afresh, new perspective and requires management that is fullya w a k e , f u l l y a l i v e a n d o f c o u r s e f u l l y f o c u s e d o n m a k i n g things better.Also, the passing of the Securitization Act, 2002 cameas a bonanza for investors in banking sector stocks that inturn resulted into an improvement in their share prices. 69 RECOVERY MANAGEMENT IN BANKS B I B L I O G R A P H Y PRIMARY DATA: IDBI Bank (Cuffe Parade, Mumbai) SECONDARY DATA:Book reference Handbook on debt (Indian Institution of banking andfinance) Business economics (T.Y.B.COM) Hindustan times (newspaper) Web reference

www.rbi.co.in www.icicibank.com www.iibf.org.in 70 [Abstract] RECOVERY MANAGEMENT IN BANKS - Mandar 71 project on recovery