NPA accounts are a kind of termite used by borrowers. It never makes a business flourish and hinders its growth in many ways. NPA Borrowers can’t run the current accounts and no bank or NBFC extends any loan facilities to such borrowers. Above all bank’s legal process to recover the outstanding amount like the possession & sale process of collateral takes the borrower’s sleeps away.
Every NPA borrower tries to convert an NPA account to a normal account. However, the question arises of how to do this, as it seems to be one of the most difficult tasks in the financial market. But, there are certain ways through which an NPA borrower becomes standard. We evaluate some following ways as per the current market & banking policies to help you on your goal :
How to Convert NPA Account to Normal Account?
1. Restructure of NPA Account:
This is one of the best ways to convert one’s NPA account to a normal account. The borrower can approach their bank & apply for restructuring of their loan. As per policy, a bank can reschedule the repayment tenor & also reschedule the EMIs. In some cases, the bank also demands depositing some money to cover interest & penalties levied on that account to make it standard. The principal balance amount after recovering all the charges will be rescheduled for the coming years in EMIs.
Through, loan restructuring banks may convert all non-fund base facilities like, Bill Discounting Loan bank guarantee, and LC into term loans, while the fund base remains the same.
2. Repaying Entire Interest & Principal:
In one order RBI(Reserve Bank of India) makes it clear that NPA classified accounts only upgraded to standard accounts only by paying overdue interest along with the entire principal of the account. And if a borrower has multiple loan accounts with the bank then also, he needs to pay overdue interest along with total principal in all loan accounts. So borrower needs to repay the total loan with interest in order to convert the NPA account to a normal account.
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3. One Time Settlement(OTS) :
One-time settlement is a tool used by banks to reduce bad loans from their books by offering a lower amount to NPA borrowers under a settlement scheme, this encourages borrowers to pay huge outstanding amounts at reduced prices & in a lump sum manner to close the NPA account. Banks time to time offer OTS schemes to NPA borrowers. In general, borrowers can also approach their banks for one-time settlement scheme or OTS. In this way, they can close their NPA account at a reduced amount.
4. Selling the Collateral Property:
Borrowers can request their banks to allow them, to liquidate the collateral properties in order to clear their NPA outstanding. This can be done under the OTS scheme or without OTS by clearing the total outstanding if his bank allows it. This can be done with the help of a tripartite agreement between the bank, borrower & property purchaser. This agreement safeguards the purchaser and gives him transparency on transactions.
5. Taking a Loan for clearing NPA outstanding:
Now, we understand that the only way to convert an NPA account to a normal account is by paying the complete outstanding. So, if a borrower does not have ample money or does not want to sell off his hard-earned properties to pay the bank, then the solution is to take a NPA loan or more precisely refinance the existing NPA account from some other institution which are providing services for such kind of NPA account finance facility.
But finding a such type of company is a real headache as today every financial consultant claims that he can arrange the finance for taking over the NPA account, but this is a total mess as they start searching & sharing your documents within his circle or in the open market.
So it is advisable to look for a company which must have past experience in such transactions & be well knowledgeable on the subject. As per my knowledge, to help you with this, there is a company known as “Fund Source India”. They are well knowledgeable & have vast experience in financing the NPA accounts and clientele in all major cities. So, you can refinance and close your NPA account completely.
How to Remove NPA from CIBIL?
An NPA (Non-Performing Asset) account can negatively impact your credit report in CIBIL, making it challenging to secure loans in the future. To remove the NPA status from your CIBIL report, follow these steps:
- Repay the Overdue Amount: Ensure that you clear the overdue interest and principal amount in full. Once the account is regularized, the bank updates your status with CIBIL.
- Opt for One-Time Settlement (OTS): Settle the account under the bank’s OTS scheme, and after the settlement, request the bank to update your status in CIBIL as “settled” or “closed.” Note that “settled” may still impact your credit score but is better than an active NPA status.
- Monitor Your Credit Report: After resolving the NPA account, regularly check your CIBIL report to ensure the bank has made the necessary updates.
- Loan for NPA Account: The borrower can take a new loan from an RBI-registered finance company to close his NPA account in full and start building a fresh repayment track with the new lender. This eventually enhances his credit scores and clears out all the issues associated with the previous loans.
Conclusion
By closing your NPA account completely by any means like through your own funds, selling a property, or refinancing your NPA account with the help of an NPA Finance, you will be successfully able to convert your NPA account to a normal account/standard account. Click Here To Refinance Your NPA Account
