Volume 20 No 22 (2022)
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A Critical Evaluation of Internal Factors Responsible for Real Estate Construction Companies to Become Non Performing Assets to Banks: With Special Reference to Selected Public and Private Banks of New Delhi and Chandigarh
Sukhbir Singh, Dr Rashmi Nair, Dr Sapna Suri
Abstract
A robust banking industry supports the development of a nation's economy. A decline in the banking industry would have an effect on other industries that contribute to the nation's economy. Unfortunately, it has been seen in India that NPAs provide a significant problem to banks and are used as a measure of their success. A high NPA demonstrates numerous loan defaulters, which has an impact on the profitability and assets of banks. Banks' primary responsibility is to provide credit for a range of economic activities that contribute to economic growth. NPAs are assets that no longer generate income for the bank or themselves. This results in a decrease in benefits and the ability of the bank to allow any additional recognition. Recovery and management of all those stressed assets, posing a threat to the economy, is a difficulty for banks. To address this issue, the Insolvency and Bankruptcy Code was created in 2016 to deal with NPAs for banks. According to the IBC, the creditors of these insolvent accounts determine whether to restructure the loan or sell the defaulter's assets to the Bank in order to recover the unpaid balance, under the supervision of an insolvency professional. The majority of people in cities dream of owning a home, therefore real estate companies borrow large sums of money to build projects. However, occasionally these projects are not financially feasible, and the corporations fail to make loan repayments. In this study, the researcher examined internal factors that led these businesses to default in the chosen northern areas.
Keywords
NPA, Real Estate, IPC, Bankruptcy code, internal factors.
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