Rs2.45 Lakh Crore Received by Financial Creditors in 394 Corporate Insolvency Resolution Cases Under IBC: Govt
Moneylife Digital Team 21 July 2021
Financial creditors, including banks, realised Rs2.45 lakh crore from approved resolution plans for 394 corporate insolvency resolution cases under the Insolvency and Bankruptcy Code (IBC) as on 30th June, minister of state for finance Pankaj Chaudhary informed the Lok Sabha on Monday. 
 
About 4,540 cases were admitted for the corporate insolvency resolution process (CIRP) under IBC until 30 June  2021, Mr Chaudhary said in response to a query posed by member of parliament (MP) Dushyant Singh in Lok Sabha about the number of CIRPs filed under the IBC till date and the amount of total debt of the companies filed for resolution till date.
 
Mr Singh also asked for details of the 100 biggest CIRPs filed and the percentage haircut taken by banks in such cases. He also sought details of winning bid and the top-100 CIRPs resolved by takeover by another entity with the percentage of haircut taken by the banks. 
 
As per inputs received from the ministry of corporate affairs (MCA), till 30 June 2021, amount realisable by financial creditors in the top-100 CIRPs that ended in resolution is Rs2.37 lakh crore, which is more than 172% of the liquidation value and more than 36% of the admitted claims, Mr Chaudhary replied.
 
Responding to a separate question asked by MP Basanta Kumar Panda, minister of state for finance Dr Bhagawat Karad said, the framework for resolution of systemically important financial service-providers other than banks, which were earlier not covered under IBC, has led to approval of a resolution plan that will help in realising Rs37,167 crore.
 
The minister added that IBC has been amended in April 2021, providing for initiation of pre-packaged insolvency resolution process to facilitate speedier resolution of micro, small and medium enterprise (MSME) debtors.
 
Mr Panda also specifically asked whether the recovery of non-performing assets (NPAs) has decreased during the past three years.  
 
In his written reply, Dr Karad said, “As per Reserve Bank of India (RBI) data on global operations, scheduled commercial banks (SCBs) have recovered an amount of Rs4.19 lakh crore during the past three financial years, with recovery as a percentage of their gross NPA at the beginning of the financial year increasing from 13.1% in FY2017-18 to 15.1% in FY2018-19 and to 15.8% in FY2019-20, and declining thereafter to 12.8% in FY20-21 (provisional data as on 31 March 2021) in the backdrop of the pandemic.”
 
However, as Moneylife has reported in recent weeks, in many cases under the IBC, the haircut taken by the lenders has been as high as 80% to 90%. Indian banks wrote off Rs1.53 lakh crore worth of loans in the financial year (FY) 2021 and Rs1.45 lakh crore in FY19-20. 
 
There has been a rising furore over the huge haircuts suffered by lenders in high-value resolutions under the IBC. 
 
The recovery rate of IBC has fallen to 39.3% as of March 2021 from 46% as of March 2020. Of the total outstanding amount of Rs1.32 lakh crore, only around Rs25,944 crore was recovered in FY20-21, or a rate of 19.7%.
 
There has been a delay in the liquidation of companies. As of December 2020, around 69% of the liquidations were going on for more than one year, while in the case of 26% of companies the process was on for more than two years.
 
According to data from the Insolvency and Bankruptcy Board of India (IBBI), 240 corporate debtors that have been liquidated till December 2020, had outstanding claims of Rs33,086 crore, with assets valued at Rs1,099 crore.
 
Financial creditors could realise about Rs55,000 crore to Rs60,000 crore in FY21-22 through successful resolution plans from the IBC, according to estimates from rating agency ICRA. 
 
However, the higher realisation by the financial creditors hinges primarily on the successful resolution of eight to nine big-ticket accounts which could bring in more than 20% of estimated realisation value. 
 
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