FinMin expects bad loan recoveries to touch Rs 1.80 trillion in FY19

With two major cases at the final stage of resolution, the Finance Ministry expects bad loan recoveries to touch Rs 1.80 trillion during the current fiscal.

So far, banks have recovered Rs 1 trillion under the Insolvency and Bankruptcy Code (IBC). The recovery is expected to touch Rs 1.80 trillion by March 2019 with some of the resolutions at the final stage, Financial Services Secretary Rajiv Kumar said.

Lenders are expecting to recover almost Rs 52,000 crore loan in case of Essar Steel while Rs 18,000 crore from Bhushan Power & Steel Ltd.

Besides, the NCLT is expected to finalise corporate insolvency resolution process of several stressed assets including Videocon Group, Monnet Ispat, Amtek Auto and Ruchi Soya.

According to estimates, the IBC has helped address stressed assets worth approximately Rs 3 trillion -- directly or indirectly -- since the new law came into force in December 2016.

In 2018, insolvency proceedings against some companies including Bhushan Steel, ElectroSteel Steel, Binani Cement were almost completed and the new management from their successful bidders -- Tata Steel, Vedanta group and Adity Birla-led UltraTech, respectively -- have taken over the management control of the stressed assets.

When asked about his outlook for public sector banks in the current January-March quarter, Kumar said it is very positive.

Banks have posted a combined profit in the last quarter, he said, adding, provisioning by and large is over and resolution in the current quarter would add recoveries.

In June 2017, RBI's internal advisory committee (IAC) identified 12 accounts, each having more than Rs 5,000 crore of outstanding loans and accounting for 25 per cent of total non-performing assets (NPAs) of banks.

Following the RBI's advisory, banks referred Bhushan Steel Ltd, Bhushan Power & Steel Ltd, Essar Steel Ltd, Jaypee Infratech Ltd, Lanco Infratech Ltd, Monnet Ispat & Energy Ltd, Jyoti Structures Ltd, Electrosteel Steels Ltd, Amtek Auto Ltd, Era Infra Engineering Ltd, Alok Industries Ltd.


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel