Vinu: Manu, before an account turns NPA, what are the first early warning signals bankers should watch?

Manu: Account behaviour. Persistent overdrawings, irregular credits, and delayed EMI of even ₹2–3 lakh are the earliest signs of stress.

Vinu: From the beginning, what is the most reliable signal?

Manu: Drop in account turnover. If the business is assessed at ₹5 crore sales, but monthly credits fall to ₹15–20 lakh, cash flow is weakening.

Vinu: How do stock and debtor trends indicate stress?

Manu: Sudden increase in stock from ₹70 lakh to ₹1.3 crore or debtors stretching beyond normal levels usually signals slow sales or window dressing.

Vinu: Do frequent ad-hoc or enhancement requests mean anything?

Manu: Yes. Repeated requests often indicate margin pressure and inability to manage working capital internally.

Vinu: What about delayed data and document submission?

Manu: Very important. Non-submission of stock statements, GST returns, or insurance on time shows declining financial discipline.

Vinu: Are cheque returns or ECS bounces strong indicators?

Manu: Absolutely. Even a few cheque returns point to cash tightness and must be treated seriously.

Vinu: How can bankers prevent slippage once EWS appears?

Manu: Immediate engagement—verify cash flows, review limits, tighten monitoring, and realign repayment schedules if needed.

Vinu: Should bankers wait for defaults before acting?

Manu: Never. EWS is a pre-default opportunity to protect the account.

Vinu: Final takeaway?

Manu: NPAs don’t happen suddenly. They announce themselves early—bankers must listen.

Vinu: That clearly explains how slippages can be prevented.

Manu: Timely action is the real risk management.

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