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Insolvency & Bankruptcy Code: Banks recover over Rs 70,000 crore

The recovery percentage for FY 2019, however, fell by to 42.5 per cent from 49.6 per cent in the previous financial year.

Written by Aashish Aryan | New Delhi |
Updated: December 25, 2019 7:15:25 am
According to the October 24 order of the Supreme Court the dues need to be paid by January 24, 2020.

Scheduled commercial banks in India recovered a total of Rs 70,819 crore in Financial Year (FY) 2018-19 under the Insolvency and Bankruptcy Code (IBC), compared to Rs 4,926 crore recovered in FY 2017-18, the Reserve Bank of India said in a report on Tuesday.

The recovery by the banks have been made from the 1,135 cases admitted for corporate insolvency resolution by the National Company Law Tribunal (NCLT) in FY19, compared to the 704 cases admitted by various NCLT benches in FY18, the Reserve Bank of India said.

For FY19, the total disputed amount involved in the cases admitted by NCLTs stood at Rs 1.66 lakh crore, compared to Rs 9,929 crore for FY18. The recovery percentage for FY 2019, however, fell by to 42.5 per cent from 49.6 per cent in the previous financial year.

Ministry of Corporate Affairs (MCA) Secretary Injeti Srinivas had, in December last year, said that the NCLTs had helped recover close to Rs 80,000 crore in 2018, and expected that the number would go beyond Rs 1 trillion in 2019.

The recoveries, made by banks, through other routes such as Lok Adalats, Debt Recovery Tribunals (DRT), and the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act, however, continued to perform dismally.

In FY19, bank recovered only Rs 2,816 crore of the Rs 53,506 crore worth of disputes from the 40.80 lakh cases filed in the Lok Adalats, a mere 5.3 per cent. In FY18, banks filed 33.17 lakh cases these Lok Adalats, and managed to recover only 1,811 crore from Rs 45,728 crore, or about 4 per cent.

The DRT route proved even tougher to recover monies for banks, as they managed to reclaim only Rs 10,574 crore from the Rs 3.06 lakh crore. The number of cases filed by banks in DRT also nearly doubled in FY 19 to 52,175. In FY18, banks had managed to recover Rs 7,235 crore from 29,345 cases worth Rs 1.33 lakh crore.

The recovery rate of banks under SARFESI also dipped in FY19.

Explained

Code lends a helping hand

The data released by RBI shows that the scheduled commercial banks have struggled to recover money from defaulters over the past two years. Of the 8.15 lakh crore, the banks managed to reclaim only 1.26 lakh crore, or about 15.5 per cent. Compared to FY18, the recovery percentage has improved slightly. The only relief for banks is the improvement in the recoveries made via IBC.

The scheduled commercial banks of the country managed to recover 14.5 per cent, or Rs 41,876 crore from 2,89,073 crore, compared to Rs 26,380 crore from 81,879 crore or 32.2 per cent in FY18.

The number of cases under SARFESI more than doubled in FY19 to 2.48 lakh cases, compared to 91,330 cases filed in FY18.

In total, the commercial banks of the country managed to recover, using all the routes, Rs 1.26 lakh crore from Rs 8.15 lakh crore, or nearly 15.5 per cent, according to the Reserve Bank of India report.

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