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Thursday 23 January 2020

Banks recover Rs 75,000 crore from 94 NPAs that owed Rs 1.75 lakh crore

According to the Crisil-Assocham study, some major difficulties need to be overcome for successful implementation of the IBC

Mumbai: In 2018-19, banks received a mere 43% of the amount 94 major non-performing assets (NPA) or accounts owed to them. They owed to the banks’ Rs 1.75 lakh crore. They paid Rs 75,000 crore.

In other words, the banks have received 57% less than what the bad creditors owed them. This has come out in a report.

This figure assumes significance as this is the third year of the insolvency and bankruptcy law.

As of March, there were 1,143 cases pending with various insolvency and loan disbursement tribunals and 32% of these cases were pending for more than 270 days.
The solution for these 94 cases took 324 days while the time limit for these was 270 days. However, the report calls the recovery “respectable”.

According to a joint study by Crisil and industry body Assocham, “With a respectable recovery rate of 43%, resolution for 94 stressed assets has been reached for Rs 75,000 crore as on March 31, 2019 out of Rs 1,75,000 crore total claim of financial creditors admitted under the Corporate Insolvency Resolution Process (CIRP) approved by the National Company Law Tribunal (NCLT),” said that report titled, “Strengthening the code”.
Some large accounts could not be resolved in more than 400 days because work on bankruptcy and debt welfare incompetence (IBC) is still underway.

According to the study, some major difficulties need to be overcome for the successful implementation of the IBC. These include timely observance, adequate judicial infrastructure, classification of lenders and other things including priority.
“To maximise the value and stakeholders’ interest, the IBC framework for liquidation under a ‘going concern’ basis needs to be explored further and should be followed in the true spirit,” the report said.

“While resolution in a time-bound manner remains a challenge along with other teething issues, the IBC, undoubtedly, since the time of its enactment has evolved considerably,” the Crisil-Assocham study added.

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