NPA Management using Blockchain

Abstract

The usage of Blockchain Technology has been increasing rapidly across the various business sectors. Multiple industries across various sectors are adopting it for its immutability, transparency, tamper proof-ness, and its distributed nature. As such, the banking industry is looking at it intently to solve a variety of problems it currently faces. One of them is NPA management. Especially in India, this is a big issue as the rate at which NPAs are growing is very high. This paper aims to find a potential solution to this problem by developing a blockchain model conceptually which uses smart contracts to effectively manage NPAs. Timers or Loop code concept in a smart contract has been utilized to keep track of a loan as it becomes an NPA. Different scenarios have been provided to explain the working of the concept. An example use case has been elaborated upon as well. The paper developed a conceptual model that is effective in managing NPA as well as it provides a scope for government, NPA as well as external auditors to monitor the state of NPAs of a bank. This paper also provides the scope to further develop the model by creating a working blockchain-based model.