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Faster Recoveries Under the IBC
Nov 7, 2018

Talking of the IBC, it is important to consider the recent successful recoveries.

If we consider two successful closures, i.e. Bhushan Steel and Electrosteel, the lenders have already recovered close to Rs 421 billion.

If we consider the other two cases of Essar Steel and Binani Cements, then the lenders would receive around Rs 492 billion.

The government expects close to Rs 1.8 trillion through the IBC. Similarly, banks expect to write back more than Rs 1 trillion from the resolution of the 'Dirty Dozen' constituting 12 big NPA accounts referred to IBC by the RBI.

This is what the RBI said in its report on trend and progress in the banking industry:

  • Banks can take advantage of the IBC to clean up their balance sheets and improve performance on a sustained basis to remain competitive. Instead of waiting for regulatory directions, banks can file for insolvency proceedings on their own to realise promptly the best value for their assets.

The IBC is positive for the long-term health of the banking system and it is evolving with time.

More importantly, lending in the next credit cycle will be more disciplined as a result.

Data Source: Ministry of Corporate Affairs
*Subject to finalisation of Ultratech Cements' bid

This Chart Of The Day was published in The 5 Minute WrapUp - This Diwali, Here's a Big Reason to be Positive About the Market

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