The Impact of Digitalization on NPA recovery in Nationalized Banks: An Empirical Research with reference to Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act

Abstract

            This research work focuses on the effects of digitalization on revitalisation of Non-Performing Assets (NPA (in the nationalised banks referring to the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002. The SARFAESI Act has provided the banks authority to control and recover the NPAs but the virtual processes have opened new ways to boost up the existing recovery ways in banking sectors. In this study, using both numerical and Citational analysis, the researcher explores how e-auctions, automated tracking system and, online loan tracking has impacted NPA recovery in Nationalized banks. Primary data is collected from questionnaires and interviews with bank officials and secondary data collected from case ‘studies’ from before digitalization for NPA recovery and after. This study concludes that, digital adoption has enhanced the speed and transparency of NPA recovery as supported by the findings in the light of achieving the objectives of SARFAESI Act. However, some barriers like technology structure, difficulty in meeting the regulations, and the readiness difference of the various banks still remain in the process. Based on these considerations, this paper provides policy suggestions to enhance the implementation of digital instruments within the SARFAESI framework to improve the effectiveness of NPA recovery procedures. The results extend knowledge about the role of digitalization in enhancing the effectiveness of NPA recovery and present directions for policymakers and banking experts.