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06-May2019

Banks take 57% haircut in 94 cases resolved in FY19: ASSOCHAM-CRISIL study

A joint study carried out by the industry body Associated Chambers of Commerce & Industry of India (ASSOCHAM) and rating agency CRISIL stated that banks have taken a huge 57% haircut in the 94 large accounts worth Rs 1.75 lakh crore which were resolved in FY19, recovering just Rs 75,000 crore or only 43% of the admitted claims under the insolvency process approved by the various national company law tribunals (NCLTs).

The numbers assume importance as the bankruptcy law enters the third year this month. As of March, there were 1,143 cases pending at various bankruptcy tribunals, and 32% of them are pending for over 270 days. The average resolution timeline for these 94 cases resolved was 324 days as against the stipulated timeline of 270 days. The study said these 94 companies were liquidated, the recovery would have been just 22% which is significantly lower than the recovery rate through normal resolution process.

ASSOCHAM-CRISIL study further said there are a few big-ticket accounts for which resolution has not been finalised for over 400 days as IBC framework is still a work in progress. According to study, some of the key issues that need to be addressed for successful implementation of IBC are adherence to timelines, adequate judicial infrastructure, creditor classification and prioritising, among others.


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