“So, that takes you close to Rs 3 lakh crore, direct and indirect impact of the IBC, which is a huge amount,” he said after adding stressed assets resolved on its own and through IBC.
He was speaking at an event hosted by industry body FICCI.
Srinivas said the insolvency law has disposed of about 50 per cent (4,400 to be exact) of the 9,000-odd cases that it received in the last two years, including those transferred from the Board for Industrial and Financial Reconstruction (BIFR).
More than 85 per cent of the resolved cases were disposed of prior to admission in National Company Law Tribunal (NCLT) on the joint request of debtor and creditor, after being brought to the IBC by the financial or operational creditor.
“Our figures show us that more than 3,500 cases got resolved pre-admission and it has resulted in claims amounting to Rs 1.2 lakh crore getting settled,” he said.
Of the 1,300 odd cases that were admitted, Corporate Insolvency Resolution Process (CIRP) for about 400 cases is complete, resolution plans for 60 cases approved, and liquidation order passed for 240 cases.
As many as 126 cases are in appeal, he said.
“These cases which have been resolved have led to recovery of about Rs 71,000 crore. If you add cases which are at mature stage, then it will come to another Rs 50,000 crore… almost Rs 1.2 lakh crore coming from resolutions. Add up the pre-admission claim settlement, it becomes Rs 2.4 lakh crore,” he said.
Further, Srinivas said Rs 45,000 crore to Rs 50,000 crore non-standard NPA accounts have been converted into standard accounts by virtue of the borrowers paying back the overdue amount taking, the total close to Rs 3 lakh crore.
Though much of the resolution amount is owed to operational creditors and not to banks, the resolved bad debt is one-third of the gross NPA of Indian banks, which is Rs 10 lakh crore.
“The Rs 3 lakh crore, direct and indirect impact of the IBC, is one-third of Rs 10 lakh crore in a way, but much of this money may not be owed to banks alone. The Rs 1.2 lakh crore which got settled to a considerable extent would be pertaining to the operational creditors.”
Operational debt consists of liabilities that a firm incurs through its primary activities. The most common operational debts are vendor payables, pension liabilities, salaries and taxes.
Srinivas said compared to the 26 per cent recovery in BIFR, the recovery through the IBC has more than doubled, including 100 per cent in some cases depending on the enterprise value, which gets preserved due to the time-bound reference under the new law.
Speaking at the conference on ‘Ensuring Efficiency in Resolution Process’, Insolvency and Bankruptcy Board of India (IBBI) Chairman M. S. Sahoo said the IBC was not a panacea for resolution and that the code will require a couple of years to gain maturity.
IBC, he said, is like an orchestra and wants everyone to play. The Committee of Creditors (CoC) has to play its due role, attend meetings and take business decisions that are viable and add value.