CG: Source says govt expects PSU banks to recover 2 trln rupees FY20

22 March 2019: As the resolution of cases and recovery under Insolvency and Bankruptcy Code gain pace, the government expects public sector banks to recover close to 2 trln rupees in 2019-20 (Apr-Mar), an improvement from the 1.8-trln-rupee target set for the current financial year, a senior finance ministry official said.

“In the current financial year, state-owned banks have performed well to meet the recovery target of 1.8 trln rupees. We expect that banks will be able to recover close to 2 trln rupees in 2019-20 (Apr-Mar). However, a formal recovery target for these banks is yet to be decided,” the official told Cogencis.

While public sector banks have recovered close to 1.3 trln rupees by mid-March, meeting this year’s target depends on the resolution of Essar Steel insolvency case before Mar 31, Cogencis had earlier reported.

Although ArcelorMittal India’s bid has been upheld by the tribunals, how the 420-bln-rupee bid sum will be distributed among the lenders is yet to be decided by the appellate tribunal. This has raised worries about the recovery from this case being pushed to the next financial year.

On Monday, the government met the senior management of public sector banks via video conferencing to take stock of the recovery target for 2018-19. 

The meeting discussed the recoveries made by public sector banks through debt recovery tribunals and SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act), along with a presentation on the Insolvency and Bankruptcy Code by the corporate affairs ministry. 

According to a recent report released by the Boston Consulting Group and Indian Banks’ Association, public sector banks have recovered a total of 2.87 trln rupees between April 2014 and December 2018. 

The report said that public sector banks have recovered close to 800 bln rupees from cases resolved under the Insolvency and Bankruptcy Code.

Cogenics reported

Categories: General News, India Bankruptcy

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