Monday, August 2, 2021
HomeEconomy and FinanceFearing action through Insolvency and Bankruptcy Code, defaulters pay up Rs 1.1 lakh crores

Fearing action through Insolvency and Bankruptcy Code, defaulters pay up Rs 1.1 lakh crores

The Insolvency and Bankruptcy Code (IBC) has proved to be a game changer for the Indian banks. So far, National Company Law Tribunal (NCLT) has admitted 977 cases where the lenders or the operational creditors filed insolvency action against the defaulters, says a report. The fear of strict action among the defaulters has led to the recovery of 1.1 lakh crore in this fiscal year.

This is another development after the telling letter of RBI Governor Raghuram Rajan to the parliamentary committee. In the letter, Rajan pointed at UPA functioning between 2006-08 and asserted that it was that functioning that led to increased NPAs in the banking sector.

He stressed on how it was common for the aides of politicians to call the banks and prompt the authorities to offer loans to their favoured corporates or groups, liable for a straight case a quid pro quo. The enactment of IBC has sufficed both to clear the dues and bring liquidation. The Insolvency and Bankruptcy Board of India (IBBI) report states, NCLT admitted 977 cases out of which 92 are closed on review, 34 closed by resolution and 136 closed via liquidation. IBBI released data showed that the 42% of the cases missed the 180 period deadlines. The law allowed another 90-day extension for their resolution.

Finance minister Arun Jaitley called it a success of IBC, as they aimed at recovering 1.8 lakh crore this fiscal year. The amount sums up to two and a half times the recovery in the fiscal year 2017-18, loosing up the accumulated NPA.

The government had earlier accredited the Insolvency and Bankruptcy Code in helping to recover about half of the NPAs left behind by UPA government. Prior to 2014, strategic debt restructuring schemes like 5/25 and S4A allowed UPA to obscure NPAs, bearing severely on the Public Sector Banks. The Era preceded had worsened the situation due to lack of any systematic loan-making programme.

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OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

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