According to statistics published by the Insolvency and Bankruptcy Board of India (IBBI), banks and other financial creditors received Rs 13,706.32 crore from six major assets designated for resolution under the Insolvency and Bankruptcy Code (IBC) between June 2020 and June 2021.
Videocon Industries, together with its 12 associated businesses, is one of these assets, from which lenders hope to collect Rs 2,962 crore. Banks, on the other hand, had to take a 60 percent haircut on the few cases that were settled. This means that they only received Rs 40 for every Rs 100 loaned.
The IBC, 2016, is an essential tool for banks and other financial creditors in resolving significant non-performing assets (NPAs). An NPA is a loan that has gone unpaid for more than 90 days. In fiscal year 2020, the Insolvency and Bankruptcy Board of India (IBBI) delayed the launch of insolvency proceedings against businesses that defaulted during the 12-month period beginning March 25, 2020.
Liquidation is the process of winding down a business by selling off its assets piecemeal, and it can take up to five years to accomplish. A successful resolution usually entails a new buyer taking over the firm that has gone bankrupt.
A closer examination of the IBBI data reveals that recent settlements have returned much less than the usual 40 percent for lenders. The average is skewed by excellent recoveries from big NPAs that were taken to court in 2017 on the directions of the Reserve Bank of India. For example, among the first 12 businesses sent to NCLT following the RBI’s instructions, Jaypee Infratech recovered completely and Essar Steel recovered 83%.
Banks’ assets that were later taken to court did not fare as well. Videocon Industries, which was on the RBI’s second list of assets for IBC resolution, only recovered 4.6 percent of what banks had loaned. Reliance Infratel, which was resolved in the fiscal year 21’s October-December quarter, returned only 10.32 percent to financial creditors.
Hello, my name is Anuj Boruah. I am quite interested in writing about current events in business, finance, and the economy. I work as a newswriter at Reviewminute.