Public sector banks (PSBs) have recovered around Rs 1.2 lakh crore form bad loans during the last financial year (FY19) as compared to 74,562 crore in financial year 2018 (FY18) mainly helped by resolution under the Insolvency and Bankruptcy Code (IBC). During the first half of FY19, banks recovered Rs 60,713 crore from stressed assets. Due to non-resolution of some big accounts referred under NCLT (National Company Law Tribunal), PSBs could not achieve the resolution target of Rs 1.80 lakh crore. But, these accounts should be resolved in the current financial year. Banks recovered close to Rs 55,000 crore from the NCLT resolution.
Two large accounts of Essar Steel and Bhushan Power & Steel are still pending to be resolved. It is expected that these two accounts should be resolved in the next few months and recoveries from these could be around Rs 50,000 crore. JSW Steel had revised its offer from Rs 11,000 crore to Rs 18,000 crore and later to over Rs 19,000 crore, whereas Tata Steel's last offer was at Rs 17,000 crore after it had refused to revise its bid. ArcelorMittal has made a bid of Rs 42,000 crore for Essar Steel.
Besides, there are issues with both solvency and liquidity in these companies. The government and the Reserve Bank of India will take adequate measures to address the issues plaguing the NBFC sector. Many NBFCs, including DHFL and Indiabulls Finance, came under severe liquidity pressure compelling them to bring down their reliance on commercial papers.