New Delhi: Public sector banks (PSBs) made gross recoveries amounting to ?1.22 lakh crore from stressed assets, meeting over two-thirds of their target for the financial year 2018-19. Out of ?1.22 lakh crore, close to 50% was recovered through cases from National Company Law Tribunal (NCLT), a senior government official told Mint.
Even though the government fell short of its target, there has been a substantial jump in the amount that lenders recovered as compared to ?74,000 crore that was recovered during 2017-18.
Continuing the momentum, the finance ministry expects higher recoveries from stressed assets during the current fiscal, the official cited above said as it expects resolution of insolvency process of four cases–Alok Industries, Ruchi Soya, Bhushan Power and Steel and Essar Steel–soon.
“Out of ?1.22 lakh crore, ?55,000 crore was recovered through NCLT in FY19. We expect resolution of four more cases soon. In fact, recovery has also improved because borrowers don’t want to be dragged into insolvency proceedings,” the official said.
Lenders are expected to recover a total of ?70,000 crore from big-ticket accounts — Essar Steel as well as Bhushan Steel and Power — during 2019-20.
According to rating agency Crisil’s estimate, the banking sector’s gross non-performing asset (NPA) has declined by approximately 10% by the end of March 2019 from 11.5% during the same period a year ago. Gross NPA of scheduled commercial banks declined to ?9.46 lakh crore, as of September 2018 from ?9.62 lakh crore as on March 2018, reply to a Parliamentary question on the Lok Sabha website showed.
“A key economic reform, the IBC (insolvency and bankruptcy code) has shifted the balance of power to the creditor from the borrower. It has instilled a significantly better sense of credit discipline. Today, there is a sense of urgency and seriousness among defaulting borrowers because losing their asset is very much a possibility if the resolution process fails,” Crisil said in a report earlier during the month.
As of now, 1,322 cases have been admitted to insolvency court NCLT. As many as 4,452 cases have been disposed at the pre-admission stage, 66 have been resolved after adjudication and 260 cases have been ordered for liquidation, Finance Minister Arun Jaitley has said in a blog in January.
“In 66 resolution cases, the realization by creditors was around ?80,000 crore. As per NCLT database, in 4452 cases disposed at the pre-admission stage, the amount apparently settled was around ?2.02 lakh crore,” Jaitley had said.