Banks may recover ₹70,000 cr in FY19
NEWDELHI: Finance minister Arun Jaitley said on Thursday that banks are expected to recover ₹70,000 crore in bad loans by resolving some of the big default cases through the National Company Law Tribunal (NCLT) by March 31, 2019.
“Some of the big 12 cases such as Bhushan Power and Steel Ltd and Essar Steel India Ltd are in advanced stages of resolution and are likely to be resolved in this financial year in which realization is expected to be around ₹70,000 crore,” Jaitley said in a Facebook post.
In the 66 cases resolved by the NCLT, creditors have recovered around ₹80,000 crore, he added.
Jaitley accused the Congress for the build-up of stressed assets. “The Congress left behind the legacy of an anachronic system of resolving commercial insolvency,” he said.
The law enacted by the Congress government for rehabilitation of sick companies “proved to be an utter failure” and several sick companies got a protective “iron curtain” against creditors, he said, adding that bad loans also accumulated due to indiscriminate lending between 2008 and 2014, the period when the Congress-led United Progressive Alliance (UPA) was in power.
The National Democratic Alliance (NDA) government enacted the Insolvency and Bankruptcy Code (IBC) in 2016 for expeditious resolution of non-performing assets (NPAS), he said. “This was the quickest economic legislative change that I have seen being made by Parliament.” Backed by the new legislation, the NCLT started resolving corporate insolvency cases.
The Congress refuted Jaitley’s claims and said bank frauds were increasing under the current government while new investments had plunged.
“While our finance minister is busy trying to defend the defenceless Rafale deal, fraudsters looted around ₹41,167 crore from our banks in 2017-2018, a steep rise of 72% over the previous year when the figure was ₹23,933 crore,” said Congress spokesperson Abhishek Manu Singhvi, referring to a recent Reserve Bank of India report that showed a 72% rise in bank frauds in 2017-18 over the last year.
“Another report states that investments in the October-december quarter fell to a 14-yearlow, with new investments being 55% lower than the year-ago period,” he added.
According to Jaitley, the NCLT admitted 1,322 cases, while resolving 4,452 cases at the preadmission stage. These, he added, settled an amount worth ₹2.02 lakh crore. “Increase in conversion of NPAS into standard accounts and decline in new accounts falling in NPA category show a definite improvement in the lending and borrowing behaviour,” Jaitley wrote.
Sanjeev Krishan, partner and leader, private equity and deals, PWC India said, “In most of the 12 large cases, there has been enough investor interest and the expectation is that legal challenges notwithstanding majority of them will be resolved”.
“A large number of the 12 were in the steel sector and those assets have seen very significant interest from domestic investors, others possibly less so,” he said.
He, however, cautioned that the key determinant for the IBC will be the recoveries in stressed assets outside the steel sector.
Some of the big 12 cases such as Bhushan Power and Steel and Essar Steel are likely to be resolved in this financial year in which realization is expected to be around ₹70,000 cr
ARUN JAITLEY, finance minister