“From Default to Resolution: Mediation and Arbitration as Strategic Tools for Managing Npas in Indian Banking”

Author(s)	Mr. Rishav Roy
Country	India
Abstract	Non-Performing Assets (NPAs) remain a persistent challenge for Indian banking because prolonged stress can reduce recoverable value, increase enforcement costs and constrain the recycling of bank capital. India has developed specialised mechanisms through the Recovery of Debts and Bankruptcy Act 1993, the SARFAESI Act 2002 and the Insolvency and Bankruptcy Code 2016. This article argues that these mechanisms should be complemented, rather than displaced, by a graduated Alternative Dispute Resolution (ADR) framework. Mediation can operate as an early-intervention mechanism for commercially viable borrowers by facilitating structured disclosure, viability assessment, restructuring and negotiated settlement. Arbitration has a narrower role in determining contractual disputes that are legally arbitrable. The article examines the Mediation Act 2023, RBI stressed-asset and compromise-settlement frameworks, relevant Supreme Court jurisprudence and the 2026 EAEI Transformers decision. It proposes a time-bound architecture combining early warning, viability review, mediation, monitored settlement and statutory recovery where necessary
Keywords	Non-Performing Assets; Banking Law; Alternative Dispute Resolution; Mediation; Arbitration; SARFAESI; Debt Recovery Tribunal; Insolvency and Bankruptcy Code; Stressed Assets; Debt Resolution.
Published In	Volume 8, Issue 5, September-October 2026
Published On	2026-09-21

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