Vol. 7, Issue 1, Part J (2025)

The issue of Non-Performing Assets (NPAs) has been a persistent challenge for the Indian banking sector, affecting both profitability and economic stability. This study explores the various mechanisms introduced by the Indian government to recover NPAs, focusing on the performance of the Lok Adalat, SARFAESI Act, and Debt Recovery Tribunals (DRTs). The findings reveal that while Lok Adalats have shown limited success in recovering bad loans, the SARFAESI Act and DRTs have proven to be the most effective mechanisms for NPA recovery. The study highlights the initial success of the SARFAESI Act, which streamlined the recovery process by enabling banks to seize and auction defaulters' assets without court intervention. However, a slowdown in recoveries through SARFAESI since 2010-11 suggests the need for reforms to broaden its scope and enhance its effectiveness. This research underscores the importance of developing a more robust recovery framework to alleviate the NPA crisis in India, with special emphasis on improving risk management and regulatory reforms.