RBI data shows banks improved recovery outcomes under the IBC and SARFAESI in 2024-25 even as the number of cases referred for resolution declined
)
The data showed that the number of cases referred to the National Company Law Tribunals (NCLTs) under the IBC declined to 732 in 2024-25 from 1,004 in 2023-24.
Listen to This Article
Indian bank’s recovery rate from bad assets under Insolvency and Bankruptcy Code improved to nearly 37 per cent in 2024-25 from 28.3 per cent in the previous year.
Recovery rate through cases referred under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act also improved to 31.5 per cent during this period, compared to 25.4 per cent in the previous year.
This lifted the overall recovery rate across all resolution channels to 18 per cent in 2024-25, up from 17.2 per cent a year earlier, according to data released by the Reserve Bank of India (RBI) in its Trends and Progress of Banking in India report.
Having said that, the data showed that the number of cases referred to the National Company Law Tribunals (NCLTs) under the IBC declined to 732 in 2024-25 from 1,004 in 2023-24, while the total amount involved fell to ₹1.49 trillion from ₹1.64 trillion during the same period. Despite the decline in case volumes and amounts, recoveries rose to ₹54,528 crore in 2024-25 from ₹46,340 crore a year earlier.
Similarly, the number of cases referred under the SARFAESI Act edged down to 215,709 in 2024-25 from 216,571 in the previous year, while the amount involved declined to ₹1.03 trillion from ₹1.19 trillion. Recoveries through the SARFAESI route, however, increased to ₹32,466 crore from ₹30,416 crore during the same period.
“The IBC remained the dominant mode of recovery, followed by the SARFAESI route. The share of IBC in total amount recovered increased,” said RBI in the report. IBC accounted for 52.4 per cent of total amount recovered in 2024-25, higher than 49.5 per cent in the previous year.
Additionally, under the IBC, the realisable value stood at 170.1 per cent of liquidation value at end-September 2025, as compared to 161.1 per cent at end-September 2024.
Banks also continued to clean up their balance sheets through sale of non-performing assets (NPAs) to asset reconstruction companies (ARCs). During 2024-25, the proportion of security receipts fully redeemed as a percentage of the previous year’s outstanding — an indicator of recovery through this route — improved to 41.8 per cent from 38.2 per cent in the preceding year.
The book value of assets acquired by ARCs went up 58 per cent to ₹16.19 trillion in 2024-25, compared to ₹10.25 trillion in the previous year. Security receipts issued by ARCs also went up 13.3 per cent to ₹3.20 trillion during the period, compared to ₹2.83 trillion.
According to RBI, asset sales to ARCs increased for private sector banks and foreign banks, while it declined for public sector banks during 2024-25.
“The book value of assets acquired by ARCs grew at a faster pace than their acquisition cost, resulting in a decline in the acquisition cost to-book value ratio at end-March 2025,” the central bank said. The ratio of security receipts issued to book value of assets acquired declined to 19.8 per cent at end-March 2025 from 27.6 per cent at end-March 2024, it added.
Data also showed that banks’ share in total subscriptions to security receipts declined marginally to 58.9 per cent at end-March 2025 from 59.1 per cent a year earlier. In contrast, the share of other investors, including qualified institutional buyers, continued to rise to 13.8 per cent from 13.1 per cent in the previous year.
aniltikotekar4sme.com 