Secretary of the Ministry of Corporate affairs had said that over two lakh crore worth of bad loans had been settled and new additions of non-performing assets have been declining since the inception of the insolvency and bankruptcy code in 2016, reports Indian Express.
“We wanted it (IBC) to be the last resort, not first. The situation today is precisely that,” Injeti Srinivas, Secretary to Ministry of Corporate Affairs was quoted saying by IE.
Speaking at the inaugural session of an international conference on ‘Insolvency and Bankruptcy Laws: Global Response’ organised by ICFAI Law School and Insolvency and Bankruptcy Board of India, Srinivas said that the RBI report suggests a decline in fresh addition to the NPAs and overall NPS.
Some businessmen used to have ‘vested interest’ in failing businesses, and as a result there was no competitive spirit among the entrepreneurs, said Srinivas. IBC has introduced competition for entrepreneurship and capital.
Earlier, during the pre-IBC regime, resolution for sick companies used to take over several years and would take almost 9 to 10 per cent insolvency cost to manage the assets, Srinivas further said.
Moreover, the recovery rate was around 25 to 26 per cent. This has changed over the past two years.