Corporate Affairs Secretary Injeti Srinivas said that the IBC (Insolvency and Bankruptcy Code, 2016 ) has also led to a tectonic shift in the behavior of both the borrower and the lender
New Delhi: In the last two years, out of the 9,000 non-performing asset (NPA) cases that went to the National Company Law Tribunal (NCLT), at least 50 percent have been disposed off, Corporate Affairs Secretary Injeti Srinivas has said.
Speaking at a convention organised by FICCI on Insolvency and Bankruptcy Code, 2016 (IBC) on November 24, Srinivas said that in a way at least one-third of the total NPA in the banking system had been resolved.
‘4,500 settled on pre-admission basis’
Srinivas said that the NCLT had played a pivotal role in purging the banking system of NPAs and elaborated on how a large number of cases were settled even before they were admitted by the tribunal.
“If we break down the numbers, we have recovered Rs 62,000 crores. If you add Binani, it amounts to Rs 71,000 crores. If you add Essar Steel’s highest bidder’s offer, as per COC, then it comes to Rs 1.20 lakh crore. The cumulative total of the two amounts to Rs 2.40 lakh crores...”
“Out of the 50 percent cases that have been resolved, at least 4,000-4,500 cases were disposed off even before they were admitted because they were raised by operational creditors. These creditors had sought time from the NCLT to sought the cases out and they were resolved eventually. According to our estimates, claims worth at least Rs 1.20 lakh crore have been settled in this manner,” he added.
Recovery close to Rs 3 lakh crores
For 60 resolutions that have taken place, the recovery has been about 46 percent. “If we break down the numbers, we have recovered Rs 62,000 crores. If you add Binani, it amounts to Rs 71,000 crores. If you add Essar Steel’s highest bidder’s offer, as per COC, then it comes to Rs 1.20 lakh crore. The cumulative total of the two amounts to Rs 2.40 lakh crores. And if you add the conversion of non-standard assets into standard assets in these two years, by way of borrowers paying back overdues, it comes close to Rs 3 lakh crores,” said Srinivas.
‘Tectonic shift in behaviour’
According to the government official, the IBC has not just been effective and has produced results that look promising, it has also led to a tectonic shift in the behaviour of both the borrower and the lender. “There seems to be tectonic change in the behaviour of borrowers and lenders. Now borrowers are mindful of the sustainability of the debt and associated risks and lenders are wary of recovering the credit. And this has had a huge impact on credit flow,” noted Srinivas.