NPA Funding In Kerala

Allow me to introduce you to Ramesh. In Ernakulam, he owns a small textile company. Three years back, everything seemed perfect orders flowing in, workers happy, expansion plans ready. Then came the pandemic. Supplies stopped. Orders cancelled. Cash dried up. Before he knew it, his loan turned into an NPA. That dreaded three-letter word that made him lose sleep for months. Sound familiar? You're not reading someone else's story. This is happening across Kerala right now.

Kerala's Silent Crisis Nobody Talks About, NPA Funding Kerala

Here's something most people don't know: cooperative banks in Kerala are sitting on NPAs worth nearly Rs 50,000 crore. Yes, you read that right. The actual defaulted amount? Rs 17,148.7 crore built up over fifteen years.​

What's worse - 15% of all cooperative bank loans in Kerala have become NPAs. Compare that to public sector banks where it's under 5%. We're talking about three lakh people who owe money. Three lakh families. Three lakh stories of struggle.​

The government knows this is serious. They're running district surveys. They want to recover around Rs 6,000 crore through mediation and asset sales. But recovery isn't just about government action, it's about finding the right solution for your specific situation.​

What Exactly Happens When Your Loan Becomes an NPA?
Let's break this down simply. Your loan becomes a Non-Performing Asset when you miss payments for 90 consecutive days. That's when things escalate quickly - your credit score tanks, banks start recovery proceedings, and suddenly getting any future loan feels impossible.​

But here's what most borrowers miss: One-Time Settlement. This is your negotiation card. Banks would rather settle for 20-50% less than your total debt and close the file than drag you through years of legal battles. They get their money faster. You get closure, a clean slate, and - most importantly - you can start rebuilding.​

Think about it. Kerala Automobiles Limited recently settled their NPA with State Bank of India for Rs 407 lakh through OTS. If a government entity can use this route, why shouldn't you?​

Your Options: More Than You Think

Option 1: The SARFAESI Route
Banks love SARFAESI because they don't need court permission to take your assets. They send you a notice under Section 13(2), give you 60 days, and can proceed with asset seizure. Sounds scary? It is. But you can challenge it through the Debt Recovery Tribunal within 45 days.​

One important thing for MSME owners in Kerala - recent High Court judgments clarify you MUST claim your MSME status before your account becomes an NPA to get revival benefits. Don't wait.​

Option 2: Lok Adalat - The Friendlier Face
We've seen dozens of cases settled through Lok Adalat. It's less formal, faster, and honestly, less intimidating than regular courts. Both sides sit down, negotiate reasonably, and reach an agreement. Once the award is passed, it's final and binding. For education loans and smaller amounts, this works beautifully.​

Option 3: NCLT and the IBC Framework
For bigger corporate messes, there's the National Company Law Tribunal operating under the Insolvency and Bankruptcy Code. Recovery rates have jumped to 43% from the old 26%. But remember, the Supreme Court recently reminded everyone that IBC exists for business revival, not just debt recovery. That's a crucial distinction.​

Option 4: NPA Funding - Your Fresh Start
This is where things get interesting. Companies specializing in NPA finance (like Credit Curators) actually pay off your existing bank on your behalf. Then they restructure your debt with manageable EMIs spread over 4-5 years. Your NPA status? Gone.You're back to having a normal account.It's essentially hitting the reset button on your financial life.​

OTS: Real Numbers from Real Places
Look at what OTS schemes have accomplished elsewhere. Uttar Pradesh's power corporation? They helped 37.60 lakh consumers and collected Rs 3,900 crore. Punjab's OTS-3 collected Rs 137.66 crore while waiving Rs 215.92 crore for struggling dealers.​

In Kerala, particularly around Kochi, OTS funding has become increasingly accessible. Whether you're in Thiruvananthapuram running a trading business, managing a manufacturing unit in Kozhikode, or operating a service company in Thrissur - specialized providers are expanding their reach.​

The OTS negotiation depends on several factors: how old is your loan, what's your repayment track record, what collateral exists. Generally, older loans and borrowers who've shown consistent effort to repay get better terms.​

What You Should Actually Do Right Now
1.) First, know your rights. If you're registered as an MSME, the RBI's Framework for Revival offers protection. Keep your registration current. Every notice should be answered right away; ignoring them only makes matters worse. ​
2.) Secondly, conduct an honest evaluation. Can you arrange OTS payment? Would NPA takeover make more sense financially? Is your case size suitable for Lok Adalat? There's no one-size-fits-all solution here.
3.) Third, get professional help. This isn't the time for DIY approaches. Firms like Credit Curators understand Kerala's banking ecosystem inside-out. They keep up their connections with asset reconstruction firms and lenders. They handle SARFAESI, DRT, and NCLT proceedings, restructure repayment plans, and align stakeholders - they don't just throw money at your problem. ​

The Bottom Line
From Ernakulam, Ramesh? He is now back in business. Got NPA funding, restructured his debt, and his textile unit is running again. He still has payments to make, but they're manageable. His credit is recovering. More importantly, he sleeps at night.

Your NPA does not define you. It's not a life sentence, but a circumstance. Kerala provides the necessary infrastructure, including OTS schemes, Lok Adalats, specialized funding companies, and legal frameworks like SARFAESI and IBC, to assist businesses in reestablishing a strong foundation. ​

Whether recovery is possible is not the real question. The question is whether you'll make the initial move today.

Are you prepared to write your story of recovery? Credit Curators is an expert in distressed asset solutions in Kerala.We understand that you need guidance, capital, and a well-defined plan of action, not opinion. One conversation is all it takes to revive your business.