Reserve Bank of India (RBI) in its latest report has showed that banks recovered Rs 404 billion worth of bad loans in last financial year (FY18) as against Rs 385 billion recovered in FY17. Banks recovered their bad loans for various channels include the Insolvency and Bankruptcy Code (IBC), the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, debt recovery tribunals (DRTs) and Lok Adalats.
Banks have seen a significant improvement in recovery of stressed assets. Recovery of stressed assets was helped by the IBC and amendments in the SARFAESI Act. Report further showed, in FY 18, while banks recovered Rs 49 billion of bad loans through the IBC, the amount recovered through SARFAESI was Rs 265 billion.
Besides, report highlighted apart from vigorous efforts by banks for speedier recovery, amending the SARFAESI Act to bring in a provision of three months' imprisonment in case the borrower does not provide asset details and for the lender to get possession of the mortgaged property within 30 days, may have contributed to better recovery.