Declining Efficacy of IBC: Banks Turn to Alternative Recovery Methods
| Aspect | Details |
|---|---|
| Why in News | Banks are reevaluating recovery strategies due to declining effectiveness of the IBC. |
| Recovery Rates | Dropped to 28% in FY24 (down from 40% in FY23). |
| Declining IBC Cases | Cases admitted to NCLT fell from 501 in H1 FY23 to 417 in H1 FY24. |
| Challenges with IBC | Average resolution time increased from 324 days to 653 days. |
| Alternative Recovery Methods | Banks are focusing on loan restructuring, bilateral settlements, and ARCs. |
| RBI Data | Recovery rate under IBC fell from 43% in 2019 to 32% in 2023. |
| Asset Reconstruction Companies (ARCs) | ARCs are gaining popularity for faster resolution of distressed assets. |
| Key Figures | Hari Hara Mishra (CEO, ARCs), Sushmita Gandhi (Partner, IndusLaw), Veena Sivaramakrishnan (Partner, Shardul Amarchand Mangaldas & Co), Srinath Sridharan (Corporate Advisor). |