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Loan and advance repayment on time is one indicator of a bank’s performance. Banks are currently dealing with an increase in the number of non-performing assets. It not only reduces bank productivity, but it also has an impact on bank liquidity and competitiveness. The country’s legal system has been a major impediment to banks’ efforts to reduce their NPAs. Proper recovery mechanisms are essential for recovering these bad loans. This paper tries to analyze the role of recovery mechanisms like Debt Recovery Tribunals (DRTs), LokAdalats and the SARFAESI Act, 2002 in recovering the amount of non-performing assets in Indian scheduled commercial banks. This study is based on secondary data gathered over ten years from RBI publications. After conducting the analysis, the results revealed that the SARFAESI Act is the most effective recovery method followed by debt recovery tribunals in resolving the issue of stressed assets. Due to their low recovery rate, LokAdalats have little impact in dealing with NPAs. This study concludes that to maintain the financial stability of Indian banks, the government and bank regulatory authorities should take various strong measures to address the problem of stressed assets.
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