NBFC Debt Recovery Advisory

Do you have a lot of non-performing assets (NPA) accounts? Take DrNBFC’s expert guidance to get custom-based solutions through our NBFC debt recovery advisory solutions. We have successfully recovered ?600+ Crore in NPA Accounts for top NBFCs of India.

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NBFC Debt Recovery Advisory

What we will do

Portfolio Assessment

We analyze delinquent accounts to identify recovery opportunities.

Strategic Recovery Planning

We design customized recovery strategies aligned with RBI norms.

Legal & Negotiation Support

We assist in settlements, arbitration, and legal recovery processes.

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NBFC Debt Recovery Advisory- An Overview

The NBFC debt recovery advisory is a process that helps non-banking financial companies to settle and recover debts and defaulted loans through the professional assistance of service providers.

At DrNBFC, we offer a range of services, including sending legal notices, negotiating settlements, facilitating arbitration, conducting skip tracing, managing debt collection, and initiating lawsuits or injunctions for loan recovery.

Our team of experts continuously monitors your list of borrowers, utilizes technology to automate the collection process & manage accounts. Are you still confused about our strategy for debt recovery? Schedule a consultation with our experts today!

Get Help for Debt Recovery for NBFC by Our 200+ Consultants

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Benefits of Debt Recovery Advisory for NBFC

The benefits of debt recovery advisory for NBFCs include regulatory compliance, risk mitigation, brand enhancement, and better cash flow.

  • Reduction in Financial Loss to the NBFC

    Regular and on-time debt recovery helps non-banking financial companies improve their scalability and minimize bad loans or debts. This process enhances the entity’s potential for future business expansion.

  • High Recovery Rates

    Advisory outsourcing entities use advanced technology to recover and settle NBFC debts more efficiently compared to in-house legal teams. This is one of the major benefits of debt recovery advisory for NBFCs.

  • Compliance With NBFC Regulations

    A monthly report of non-performing loans must be submitted to the Reserve Bank of India (RBI). As per the SARFAESI Act, noncompliance can result in hefty penalties or cancellation of the NBFC license.

  • Risk Management

    Our experts assist non-banking financial companies in identifying and monitoring repeated defaulters and high-risk accounts. This enables NBFCs to improve their risk mitigation strategies effectively.

  • Intact Brand Reputation

    By partnering with an outsourced NBFC debt recovery advisory firm, you can maintain your brand image while ensuring diplomatic debt collection. This approach minimizes customer complaints and preserves market reputation.

  • Uninterrupted Cash Flow

    Faster debt recovery for NBFCs helps maintain steady cash flow necessary for day-to-day business operations. It’s one of the most significant advantages of outsourcing debt recovery services.

  • Focus on Business Expansion

    With debt recovery handled by a third-party outsourcing firm, NBFCs can concentrate their resources and efforts on product development, brand building, and business growth.

  • Cost-Effective Solution

    Outsourcing to a professional firm provides specialized expertise without heavily impacting the NBFC’s budget. It is more economical compared to maintaining an in-house team with additional employee benefits.

NBFC Debt Recovery Services by DrNBFC

With the help of DrNBFC, you can recover loans through strong negotiation skills that will assist you in having a dialogue with borrowers to revise the repayment agreement, restructuring the process in high-risk situations.

By availing the NBFC debt recovery services, you open the door to our team of 200+ experts in legal and financial fields with professional experience in negotiation and court argumentation.

SARFAESI Act of 2002 for NBFC Debt Recovery Advisory

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) of 2002 for NBFC debt recovery advisory is a process that enables eligible entities to recover non-performing assets/defaulted loans without the court’s intervention.

Through the power of this law, the lender (NBFC entity) can seize and auction off any collateral pledged as security against the credit in case the borrower defaults on the loan.

According to the 2020 amendment, now NBFCs with an asset size of INR 100 crore can enforce security interests for debts of INR 50 lakh and over.

Process of Debt Recovery for NBFCs with DrNBFC

Scroll down and find out the step-by-step process of debt recovery for NBFCs with the expert legal guidance of DrNBFC:

  • Step 1 - Contact Us: 30-Minute Consultation

    The first step is to get in touch with us for a 30-minute consultation. Our NBFC consultants will assess your situation and explain the methods and eligibility criteria for faster debt recovery based on your asset size.

  • Step 2 - Document Preparation

    We’ll assist you in preparing the mandatory documents required for NBFC debt recovery. This includes drafting written notices, copies of loan and security agreements, the NBFC’s company registration certificate, and the borrower’s KYC details.

  • Step 3 - Notice Sending

    Depending on your NBFC’s asset size, we’ll send a notice to the borrower for loan repayment. If your NBFC’s asset value exceeds INR 100 crore and the loan due amount is INR 50 lakhs or more, we issue a notice under the SARFAESI Act with a 60-day repayment window. For NBFCs valued below INR 100 crore, we send notices as per the loan agreement and applicable laws, including the Negotiable Instruments Act, 1881.

  • Step 4 - Seizing Securities in Case of Non-Payment

    As per the SARFAESI Act, we must wait for at least 60 days after issuing the notice before initiating asset possession procedures. Once the timeline lapses, we may sell, lease, or assign the secured assets to recover the debt. Alternatively, if the NBFC is not eligible under the SARFAESI Act, we initiate negotiations with the borrower as per the loan agreement.

  • Step 5 - Initiating Legal Proceedings

    If the borrower fails to respond or repay the loan despite multiple notices or settlement attempts, we proceed with filing a lawsuit under the applicable laws before a court of appropriate jurisdiction. This includes initiating arbitration, mediation, or litigation as necessary to ensure debt recovery.

Connect with DrNBFC, India’s No.1 NBFC Compliance partner, for fast and result-driven debt recovery solutions.

Need Help with Debt Recovery Advisory for NBFC?

Are you stressed with the increasing non-performing asset accounts? Rest assured, with our assistance, you’ll never have to face any challenges while recovering unpaid dues and loan settlements via our debt recovery advisory for NBFC.

We conduct detailed case assessments, take strategic action, and obtain a favourable order for you through the active presence of our legal professionals in the Debt Recovery Tribunal (DRT).

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Documents Required for NBFC Debt Recovery Advisory

The documents required for NBFC debt recovery advisory are as follows:

  • A copy of the original security documents, including property, vehicle, or related assets held as collateral against the loan.
  • A written notice demanding that the defaulting borrower repay the loan within the prescribed timeline.
  • Original copy of the loan/credit financing agreement that was drafted at the time of fund disbursal.
  • A copy of the guarantee agreement, if applicable.
  • Insurance policies, if any.
  • KYC documents of the NBFC and the borrower.
  • Ledger statements demonstrating the loan default.
  • Copies of agreements, including property deeds or any other related secured assets.
  • The certificate of registration of the NBFC in accordance with Section 45-I of the RBI Act of 1934.

Eligibility Criteria for NBFC Debt Recovery Advisory Via SARFAESI Act

The eligibility criteria for NBFC debt recovery advisory via the SARFAESI Act include the following:

  • The non-banking financial company must have an asset valuation of at least INR 100 crore or more.
  • The said NBFC can only recover a debt if it’s a minimum of INR 50 lakhs or more.
  • The borrower must be classified as a non-performing asset (NPA) account if there’s no payment for a continuous 90-day period in accordance with the RBI.
  • A written notice must be sent to the borrower, intimating them to clear their dues within the 60-day timeline pursuant to Section 13 (2) of the SARFAESI Act of 2002.

RBI Guidelines for Debt Recovery for NBFCs

Discover the Reserve Bank of India’s guidelines for debt recovery for NBFCs as described below:

  • The NBFC shouldn’t engage in any sort of harassment or use offensive language against the borrowers.
  • Sharing of loan details with authorized third parties is strictly prohibited.
  • Any unauthorized seizure would amount to the cancellation of the NBFC’s certificate of registration with the RBI. The authority can also initiate legal action against the entity.
  • The non-banking financial company is solely responsible for the actions of its outsourcing debt recovery team or firm.
  • All NBFCs must follow the protocol before sending a legal notice, meaning they can only send a written notice if the defaulting party has failed to pay the loan within the 90-day period.
  • The borrowers must be clearly informed about their options in the said notice.
  • The NBFC must amicably settle the debt if it allows as per the loan agreements, and the asset value is less than INR 100 crore, because such companies cannot move for possession and seizure of secured assets under the SARFAESI Act.
  • The NBFC debt recovery advisory firm must send the outstanding amount and ledger to the defaulting borrower through their agents.
  • If the outstanding amount is paid, then the NBFC must release the secured asset back to the borrower.
  • The non-banking financial company must have a consumer grievance system as per the RBI. The company must resolve complaints within 30 days. Any noncompliance will result in the borrower filing a case with the RBI ombudsman through the authority’s CMS portal.

Post Online NBFC Registration Requirements

Before Since 2020, RBI has mandated businesses with NBFC license to comply with the following post-online NBFC registration requirements:

Debt Restructuring

We provide expert advisory services for debt restructuring to help borrowers facing financial challenges. Our team ensures all restructuring is carried out in accordance with the NBFC’s approved restructure policy and regulatory guidelines.

Asset Recovery

Our specialists assist in implementing asset repossession procedures followed by sale or assignment through auction or other modes in the event of loan default, ensuring maximum recovery value for the NBFC.

Legal Notice Sending

We draft and send legally compliant notices to defaulting borrowers under the SARFAESI Act, Negotiable Instruments Act, or any other applicable law, demanding repayment of outstanding loan amounts within the prescribed timelines.

Implementation of Grievance Redressal

We help NBFCs establish and implement a borrower grievance redressal mechanism in accordance with RBI guidelines, ensuring transparent and fair handling of customer complaints as an authorized outsourcing partner.

Ongoing Compliance With RBI

Our team ensures continuous adherence to the Reserve Bank of India’s regulations regarding borrower rights, loan recovery practices, and NBFC responsibilities throughout the debt recovery process.

Drafting of Recovery Policy

We assist in developing and implementing a board-approved recovery policy for NBFCs as per the Fair Practices Code (FPC), promoting transparent, ethical, and efficient loan settlement and recovery procedures.

Technological Advisory

Our experts guide NBFCs in adopting advanced debt recovery systems, including loan management systems (LMS) with automated repayment tracking, digital communication tools, and analytics-driven recovery strategies.

Why Trust DrNBFC for NBFC Debt Recovery Advisory?

With over 10+ years of experience as a compliance service provider, we’re blessed with a team of 200+ lawyers, CAs, and financial experts. Expedited recovery via SARFAESI, IBC, and DRT is our strength. Below are key points to get assured assistance in NBFC debt recovery advisory by DrNBFC:

  • Achieved an average recovery rate of 99% for NBFC clients.
  • In-depth knowledge of financial regulations.
  • Share 10X growth formula with NBFC clients like you.
  • Adherence to strict confidentiality agreements.
  • Positive record of recovering ₹600+ crore in NPA accounts for NBFCs.
  • Minimizing delays and maximizing NBFC debt recovery potential.
  • Proactive risk assessment and management strategies to prevent further financial losses.
  • Working closely to integrate debt recovery solutions into your business strategy.
  • Best NBFC debt recovery services in the industry.

Frequently Asked Questions on NBFC Debt Recovery Advisory

We’ll help you with the following services for debt recovery advisory for NBFC:

  • Drafting of custom-based legal notices.
  • Assisting in renegotiating the loan repayment policy.
  • Drafting of petitions and court representation as litigation support.
  • Helping you comply with the RBI to avoid penalties.
  • Arbitrating and mediating to settle debts amicably.
  • Reviewing loan, security, and recovery policies.

An NPA is a non-performing asset, which is overdue for at least 90 days. After the end of the said period, the lender can initiate the process to recover the debt from the defaulting borrower as per the loan agreement or other applicable laws.

The following are the key legal remedies that help in recovering a loan:

  • Sending a legal notice to the defaulting party demanding that they repay the unpaid amount. This notice contains details about the loan agreement, outstanding instalments, and further legal action for nonpayment.
  • Negotiating for a settlement is a process where both the creditor and debtor negotiate the terms and amount of repayment without court intervention.
  • Filing of recovery lawsuits in courts is done against repeat defaulters under the Civil Procedure Code.
  • Arbitration is an alternate dispute resolution, which is carried out in case there’s an arbitration clause in the loan agreement.

The legislation for debt recovery for NBFC is as follows:

  • Indian Contract Act of 1872: To enforce the loan agreement and contracts for unpaid loans or defaults.
  • Negotiable Instrument Act of 1881: Applicable to bounced cheques against outstanding loans.
  • SARFAESI Act: Applicable only to NBFCs with an asset value of INR 100 crore or more and secured loans of INR 50 lakhs or above.
  • Civil Procedure Code of 1908: For filing lawsuits in courts.

Go through the following issues that NBFCs may deal with during loan recovery:

  • Failure of borrowers to repay loans due to financial issues, increasing NPAs for the NBFCs.
  • Complex legal process for small-scale non-banking financial companies that need to go through lengthy negotiation and legal proceedings to settle the entity’s debt.
  • Lack of skilled legal professionals, with expensive in-house teams.

NBFCs with an INR 100 crore asset value and at least INR 50 lakhs in secured loans can recover loans through the SARFAESI Act.

The legislation helps NBFCs to recover and settle debts without obtaining a court order. The act only applies to entities with an asset size of INR 100 crore and above and outstanding debt of INR 50 lakhs or more. All you need to do is send a written notice and provide 60 days to the borrower for repayment of the loan before taking possession of the secured assets for subsequent assignment or sale.

Select and eligible non-banking financial companies are allowed to enforce security interest for a debt amounting to INR 50 lakhs or more as per the 2020 amendment of the SARFAESI Act.

All NBFCs must follow the guidelines below for recovery agents:

  • The agents must carry an identification card with authorization letters and a copy of the recovery notice.
  • The entity should maintain a register with up-to-date information about its agents on its website.
  • In case a recovery agent is changed, the NBFC must immediately inform the borrower about the same.
  • A thorough background check and due diligence must be conducted before the agents are given cases.

A debt is a liability claimed by the creditor. It includes the principal amount, applicable interest, and penalties.

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