ADVANTAGES TO THE BANK 1) Concept of time value of money i.e. “a bird in hand is worth two in bush”. The money realized early could be invested/lent to earn. 2) Realisation of securities is difficult stocks, machinery have high incidence of depreciation and obsolescence on taking possession, storage, safety thereof poses a problem and also involves cost for a longer period. Even in cases where court receiver/commissioner is appointed, assets do not realized fast value of mortgaged agricultural land properties located in rural, semi-urban areas is difficult to realize and no bidder comes forward when the property is put to auction. This is precisely the reason why many decrees obtained by the banks have merely remained on paper for want of effective execution thereof. 3) To maintain the image of “development banker”, compromises, which involve sacrifices, can be pursued only if both the parties to the settlement perceive latent gain in the process of bargain.
3) CORPORATE DEBT RESTRUCTURING (CDR) : A need was felt to create a special agency to facilitate debt restructuring because there has been some hesitancy on the part of banks and financial institutions to implement RBI guidelines on debt restructuring. Recently a three-tier body, viz., CDR has been set up to coordinate corporate debt restructuring programme. It is yet to be operationalised CDR consists of 75