In the Indian context, stressed assets broadly include non-performing assets (NPAs), restructured advances, and other credit exposures that exhibit signs of financial distress or heightened default risk. Their accumulation has historically been associated with factors such as excessive corporate leverage, project delays, economic slowdowns, sector-specific disruptions, weak credit appraisal, and deficiencies in monitoring and governance.

Recognising the systemic implications of stressed assets, India has developed an extensive institutional and regulatory framework for their identification, resolution, and recovery. The Reserve Bank of India (RBI) has introduced prudential norms and resolution frameworks aimed at promoting early recognition of financial stress and time-bound corrective action. In parallel, the Insolvency and Bankruptcy Code, 2016 (IBC) established a structured mechanism for insolvency resolution and creditor recovery, while Asset Reconstruction Companies (ARCs) provide an additional channel for the acquisition and resolution of distressed loans. Effective management of stressed assets is therefore central to strengthening bank balance sheets, improving credit discipline, facilitating productive reallocation of capital, and supporting the long-term resilience and efficiency of India’s financial system.