The government seems to have made an earnest attempt to resolve the financial stress in the corporate sector. Data put out by corporate affairs secretary Injeti Srinivas drives home the fact that de-stressing corporate assets and resolving banks’ sticky loans is on a firm path. If government figures are any indication, over 9,000 companies are being subjected to redress under the Insolvency and Bankruptcy Code (IBC) that became fully operative in December 2016. Obviously, these cases include the companies that have been admitted into the National Company Law Tribunal (NCLT) for resolution process under the IBC. There’s no reason why this process should not be hastened further and resolutions done more quickly.

Interestingly enough, over 3,500 cases of stress involving Rs 120,000 crore worth of loans have been resolved through negotiations and mutual understanding between stakeholders. Such a concerted effort to deal with non-performing assets of banks has not been undertaken since 1991 when liberalisation of Indian economy began. As on date only 1,300 companies have been admitted before NCLT for resolution of stressed assets held by companies possibly due to non-favourable business environment or genuine failure. But, there’s no denying the fact that willful defaulters do exist in substantive numbers. What’s significant is that only 240 companies will go through liquidation while about 126 cases preferred appeal against NCLT directives. As argued in these columns, liquidation of stressed assets should be the last policy option to be exercised by the government, banks and other stakeholders. While recoveries worth Rs 71,000 crore have already been done, another Rs 50,000 crore may be realised in due time. All these recoveries have happened in the pre-admission stage thereby hinting at more such possibilities. While Rs 130,000 crore were to be resolved through NCLT process, about Rs 50,000 crore stressed loans seem to have turned standard assets as a direct fallout of the government campaign.

However, the government will do well by tackling several issues that contributed to inordinate delays in resolving non-performing assets of banks that touched a whopping Rs 10.8 lakh crore. For instance, over 3200 cases have faced delays even at the admissions stage. The biggest challenge seems to be in finding competent insolvency professionals as well as straightening out bottlenecks with the committee of creditors. Technical and financial evaluation of bids with NCLT also seems to be taking a lot of time. These delays seem to have led to loss of interest from companies that were seriously involved in the bidding process. Insolvency and Bankruptcy Board of India can perhaps take the initiative to resolve some of the irritants in IBC and NCLT resolution process.

Similarly, Committee of Creditors may have to take their jobs more seriously. Also, better coordination among bankers and quick calls on possible haircuts, board appraisals may yield better results. Given that there are no reports of political interference in the process, the bureaucracy should shoulder the responsibility of working overtime to resolve the cases already with them. Cases before debt recovery tribunals (DRTs) will have to be dealt with in parallel to find a way on Rs 800,000 crore worth loans locked in dispute. More tribunals with competent specialists in corporate law and banking will have to man these tribunals. Setting a deadline for DRT cases like IBC – NCLT could also be considered.