Rs.1.1Lakh Crores recovered from Loan Defaulters

Rs.1.1Lakh Crores recovered from Loan Defaulters

The fear of insolvency action has helped creditors, led by banks, recover Rs 1.1 lakh crore from loan defaulters who were earlier unwilling to clear dues, with promoters of errant companies paying up to avoid losing control. Last week, the government had said public sector banks were aiming to recover around Rs 1.8 lakh crore from loan defaulters this fiscal year

Today, banks are seen to be the biggest beneficiaries of the Insolvency and Bankruptcy Code (IBC), enacted to bring rogue borrowers to book. The fear of insolvency action has helped creditors, led by banks, recover Rs 1.1 lakh crore from loan defaulters who were earlier unwilling to clear dues, with promoters of errant companies paying up to avoid losing control.

So far, 977 cases have been admitted by the National Company Law Tribunal (NCLT) where either the lenders or the operational creditors, such as suppliers, have sought to initiate action. The number of cases filed is almost four times higher, sources said, but many are withdrawn before they are admitted as the borrower agrees to settle the dues. “It would be wrong to say that all the cases are withdrawn because the debtor pays up, but we are seeing that dues are cleared in a large number of cases once a case is filed,” a senior official said.