Economic Survey 2021: Recoveries Under IBC Highest Among All Debt Recovery Methods
(Photographer: Prashanth Vishwanathan/Bloomberg)

Economic Survey 2021: Recoveries Under IBC Highest Among All Debt Recovery Methods

Recovery of non-performing assets of scheduled commercial banks was highest under the Insolvency and Bankruptcy Code compared to other debt recovery methods, Economic Survey 2020-21 points out.

The survey said IBC recoveries were more than the combined recoveries each year under Lok Adalat, Debt Recovery Tribunal and the SARFAESI Act during 2016-17 to 2019-20. SARFAESI yielded highest recoveries for banks prior to the introduction of the insolvency code.

“The amount recovered by scheduled commercial banks under IBC was Rs 1.73 lakh crore which is more than all the amount recovered by all other alternative mechanisms combined for 2019-20.” - Economic Survey, 2021

Statistics of resolution under the IBC reveal that:

  • 308 corporate debtors, which owed more than Rs 4.99 lakh crore to lenders, have gone through resolution process as on December 2020.
  • The realisable value of the assets of these corporate debtors was Rs 1.03 lakh crore. But creditors were able to recover Rs 1.99 lakh crore, which was more than 193% of the realisable value of these corporate debtors.
  • Financial creditors recovered more than 43% as compared to their claims for all the years since the inception of IBC.
“The Code has facilitated the recovery of NPAs by banks. RBI data indicates that as a percentage of claims, scheduled commercial banks have been able to recover 45.5% of the amount involved through IBC for the financial year 2019-20, which is the highest as compared to recovery under other modes and legislations.” - Economic Survey, 2021

For the 12 large accounts under IBC, the realised amount as a percentage of admitted claims ranged between 17% to 100%, as per the data collected by the IBBI—lowest being for Alok Industries Ltd., and highest for Jaypee Infratech Ltd.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.