Recovery of Retail Loans and Related Processes
Recovery of Retail Loans - Banking Notes Recovery of Retail Loans and Related Processes 1. Repayment in Retail Loans Repayment in retail loans refers to the scheduled payment of principal and interest by the borrower. It is typically done through Equated Monthly Installments (EMIs). 2. Default and Rescheduling in Retail Loans Default occurs when a borrower fails to repay on the due date. Rescheduling involves altering repayment terms to ease borrower’s burden due to financial stress. 3. Monitoring of Loan Accounts Banks regularly monitor loan accounts through system-generated alerts, overdue reports, and account performance reviews to ensure timely repayments. 4. Classification of Irregular Loan Accounts Accounts are classified as SMA (Special Mention Accounts) or NPAs based on the number of days past due: SMA-0: 1–30 days SMA-1: 31–60 days SMA-2: 61–90 days NPA: >90 days 5. Recovery Policy...