Economic survey on asset quality of banks

Key takeaways include:

• Gross Non-performing Assets (GNPAs) for Indian lenders had reduced to a seven-year low of 5% in September 2022
• GNPAs of banks is likely to fall to 4.9% of the total loan book by March 2023 from around 8.2% in March 2020
• 46% of Corporate Insolvency Resolution Processes (CIRP) have ended in orders for liquidation, since the inception of the Insolvency and Bankruptcy Code (IBC) in December 2016
• 5,893 of CIRPs had commenced by end-September 2022, of which 67% have been closed.
• Of these, around 21% were closed on appeal or review or settled, 19% were withdrawn, 46% ended in orders for liquidation, and 14% resulted in the approval of resolution plans
• 52% of the ongoing CIRPs belong to industry and 37% to the services sector, as of September 2022
• Within the industry, 74% of the initiated CIRPs are from the manufacturing sector
• Manufacturing industries such as textile, basic metals and food accounted for 48% of the CIRPs
• In services, 60% belongs to real estate, renting and business activities
• ~1,351 Corporate Debtors (CDs) initiated voluntary liquidation under the Code as of end-September 2022
• ~553 CIRPs have ended in resolution. Nearly 69% of distressed assets were rescued by the Code.
• In terms of value realization for initiators of CIRPs, the resolution plans realized Rs 2.4 lakh crore, which is 177.6% of the liquidation value and 841% of the fair value of the 553 CDs rescued
• The total amount recovered by Scheduled Commercial Banks under the IBC was the highest compared to other channels such as Lok Adalat, SARFAESI Act and DRTs in FY22