Bad Loans, NPAs and the IBC
Recoveries, Haircuts and Delays
IBC has recovered more than earlier methods but takes longer than intended, and creditors often take large haircuts.
Reading the numbers.
Recovery
Creditors recover roughly a third of the admitted claims, more than under earlier systems such as DRTs.
Haircuts
In resolved cases, creditors often accept a big reduction in claims.
Delays
Average case time exceeds the 330-day limit because of litigation.
Deterrence
Many borrowers now pay before entering IBC to avoid losing control.
A quick settlement
A promoter settles dues to stop a company entering the process.
Judging IBC only by recovery rates
Deterrence also matters.
Key takeaways
- Recovery has improved.
- Haircuts remain large.
- Delays persist.
- Deterrence changes behaviour.
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