Recovery Management Process of Indian Commercial Banks - A Special Reference to Non-Performing Assets Manoj Kumar Sahoo*, Muralidhar Majhi** * PhD Research Scholar, P.G. Department of Economics, Sambalpur University, Odisha. Email: mksahoomba@gmail.com ** Assistant Professor in Economics, School of Economics, G. M. University, Sambalpur, Odisha. Email: muralisbp1974@gmail.com Abstract The best indicator of the measure of the health of the banking industry in a country is its volume of Non- Performing Assets (NPAs). The increasing number of NPAs in commercial banks is a major concern in India. The best solution to reduce the volume of NPAs depends on good management of recovery mechanisms. The present context of research focuses on the recovery mechanism of NPAs with three important legal measures. Most of the cases are being negotiated and monitored through Lok Adalats in order to reduce the burden of those assets which cease to generate revenue. In addition to this, there is Debt Recovery Tribunals mechanism (DRTs), which focuses on diminishing the balance of NPAs. However, the third measure includes Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act), which allows banks to curb NPAs. The entire study is based on secondary data and SPSS is used to analyze the data. The study revealed that there is a statistically significant difference between the number of cases referred to the recovery mechanisms and the amount recovered through various recovery channels. Keywords: NPAs, Recovery Mechanism, DRT, Lok Adalats, SARFAESI Act Introducton The Indian banking industry plays a major role in the growth and development of the country’s economy. International Journal of Banking, Risk and Insurance 8 (2) 2020, 27-34 http://publishingindia.com/ijbri/ A good percentage of the shares in the banking sector contributes to the GDP of India. But the volume of NPAs is increasing day by day. So, the fnancial performance of the banking industry is hampered because of the large volume of non-performing assets (NPAs), as it indicates the proftability and income growth of the banks. The high percentage of NPAs is due to the target-oriented approach by banks, ineffective supervision, improper management of loan accounts, wilful defaulters, unwanted disbursal of loans, and fnally, improper recovery mechanisms. According to the Reserve Bank of India (RBI), term loans on which interest or instalment of principal remain unpaid or overdue for more than 90 days from the end of a particular quarter is called a non-performing asset. NPAs create an unfavorable impact on liquidity, proftability, and solvency of banks. But the recovery of bad loans from borrowers, and the management of NPAs, bringing them to a sizeable level, are a challenge for the banks. Thus, the increasing volume of NPAs has an adverse effect not only on the banks, but also the economy as a whole. An asset that fails to generate income for the banks is called a non-performing asset. The banks should develop proper credit appraisal processes rather than trying to recover an asset after it becomes an NPA. Private sector banks are more fnancially viable than public sector banks. At present, the RBI has enacted and enforced several recovery mechanisms. Hence, to reduce the volume of NPAs, bad loans are to be recovered in time and managed properly. The three major instruments of the recovery channel are discussed further. Submitted: 12 May, 2020 Accepted: 29 May, 2020