In the financial year ending March 2018 banks recovered Rs 40,400 crore worth of bad loans compared to Rs 38,500 crore recovered in last year (FY17).
In addition to recovery through various resolution mechanisms, banks are also cleaning up their balance sheets by selling dubious / lost assets to asset reconstruction companies (ARCs) and other banks / NBFC / financial institutions through haircuts, according to The report.
During the period 2017-18, the cost of acquiring ARCs as a proportion of the book value of assets has increased, which indicates a better realization by banks in the sale of stressed assets.
While private sector banks have been more aggressive with asset sales, state lenders were delayed, mainly due to large cuts and several management problems, according to the report.
“Strengthening the infrastructure of the insolvency resolution process, including the proposed increase in the number of seats in the National Societies’ Law Courts (NCLT), should help reduce the total time taken currently for the resolution under the IBC, “said the RBI.
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