The latest trends and progress banking report from RBI points to a recovery rate of 45% for cases under the insolvency and bankruptcy code. According to the RBI report, 1,953 cases were referred to bankruptcy courts involving ₹2.32 trillion, of which ₹1.05 trillion was recovered during fiscal year 2020. Other resolution methods such as Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) showed a recovery rate of less than 25%.
“A careful examination of data released by Insolvency & Bankruptcy Board of India (IBBI) reveals that recovery rates are swayed by the top 9 accounts, barring which, the recovery rate is just 24% under IBC," said Macquarie report.
The top 9 accounts were large steel accounts, where recovery rates were very good. Complex assets, especially in infrastructure-related sectors, have been difficult to resolve.
According to IBBI data quoted by Macquarie, of the total 4,300 odd cases that have been admitted to IBC since fiscal year 2017, only 8% have been resolved, and nearly 40% cases are still pending.