NBFC Advisor

NBFC Debt Recovery: Challenges, Solutions & The Way Forward

  • 25-Apr-2025
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Non-Banking Financial Companies (NBFCs) are grappling with mounting defaults, prolonged legal processes, and tightening cash flows. In today’s landscape, debt recovery isn’t just about compliance—it’s about business continuity and survival.

Regulatory Update:

Recent amendments to the SARFAESI Act have brought much-needed relief to NBFCs:

  • NBFCs with ₹100 crore in assets (earlier ₹500 crore) can now exercise recovery powers under SARFAESI.

  • The minimum eligible loan amount for recovery has been reduced to ₹50 lakh (earlier ₹1 crore).

Key Challenges:

  • Complex regulatory environment: Navigating SARFAESI, IBC, and RBI guidelines is cumbersome.

  • Delayed legal processes: Sluggish court proceedings lead to delayed cash inflows.

  • Weak documentation: Poor paperwork often results in weak recovery cases.

  • Aggressive recovery tactics: Risk of reputational damage and regulatory scrutiny.

  • Rising NPAs: Threaten financial health and investor confidence.

The Way Forward:

✅ Develop transparent and fair recovery frameworks
✅ Harness AI and data analytics for early warning signals
✅ Ensure robust legal documentation from the start
✅ Expedite recovery processes under SARFAESI and IBC
✅ Establish dedicated grievance redressal cells for borrower concerns

In a rapidly evolving financial ecosystem, NBFCs need a strategic, tech-enabled, and legally sound debt recovery approach to stay resilient.

Need expert guidance on debt recovery strategies for your NBFC?
Contact us for a free consultation.
📞 +91 93113 47006

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