{"id":6372,"date":"2020-06-04T21:33:44","date_gmt":"2020-06-04T16:03:44","guid":{"rendered":"https:\/\/carajput.com\/blog\/?p=6372"},"modified":"2025-11-08T12:39:00","modified_gmt":"2025-11-08T07:09:00","slug":"union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks","status":"publish","type":"post","link":"https:\/\/carajput.com\/blog\/union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks\/","title":{"rendered":"Union cabinet confirms 6 month IBC holidays for NPAs"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Page Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69d592c3117da\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #000000;color:#000000\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #000000;color:#000000\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69d592c3117da\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/carajput.com\/blog\/union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks\/#Union_cabinet_confirms_6_month_IBC_holidays_for_NPAs_what_will_be_the_effect_on_banks\" title=\"Union cabinet confirms 6 month IBC holidays for NPAs; what will be the effect on banks?\">Union cabinet confirms 6 month IBC holidays for NPAs; what will be the effect on banks?<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/carajput.com\/blog\/union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks\/#In_this_sense_the_IBC_holiday_was_declared\" title=\"In this sense, the IBC holiday was declared\">In this sense, the IBC holiday was declared<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/carajput.com\/blog\/union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks\/#IBC\" title=\"IBC\">IBC<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/carajput.com\/blog\/union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks\/#Gross_NPA_Non-Performing_Assets_over_the_last_seven_years_for_Scheduled_Commercial_Banks_SCBs_in_India\" title=\"Gross NPA (Non-Performing Assets) % over the last seven years for Scheduled Commercial Banks (SCBs) in India.\">Gross NPA (Non-Performing Assets) % over the last seven years for Scheduled Commercial Banks (SCBs) in India.<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/carajput.com\/blog\/union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks\/#Gross_Non-Performing_Assets_Percentages_March-end_figures\" title=\"Gross Non-Performing Assets Percentages (March-end figures)\">Gross Non-Performing Assets Percentages (March-end figures)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/carajput.com\/blog\/union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks\/#RBI\" title=\"RBI\">RBI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/carajput.com\/blog\/union-cabinet-confirms-6-month-ibc-holidays-for-npas-what-will-be-the-effect-on-banks\/#Governments_initiative_began_on_NPA_recovery\" title=\"Government&#8217;s initiative began on NPA recovery.\u00a0\">Government&#8217;s initiative began on NPA recovery.\u00a0<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3><a style=\"font-size: 16px;\" href=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/IBC-RJA.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-6373\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/IBC-RJA-1024x576.jpg\" alt=\"www.carajput.com;IBC\" width=\"1100\" height=\"618\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/IBC-RJA-1024x576.jpg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/IBC-RJA-300x169.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/IBC-RJA-768x432.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/IBC-RJA.jpg 1280w\" sizes=\"(max-width: 1100px) 100vw, 1100px\" \/><\/a><\/h3>\n<h2><span class=\"ez-toc-section\" id=\"Union_cabinet_confirms_6_month_IBC_holidays_for_NPAs_what_will_be_the_effect_on_banks\"><\/span><span style=\"color: #000080;\">Union cabinet confirms 6 month IBC holidays for NPAs; what will be the effect on banks?<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul>\n<li>This will apply to <strong>NPAs (non-performing assets)<\/strong> after March 25. This was one of the suggestions that Finance Minister Nirmala Sitharaman revealed in her press conference sequence on the Rs 20 Lakh Crore Economic Package.<\/li>\n<li>The central government cleared the suggestion to suspend <a href=\"https:\/\/Analysis of Limitation Act and IBC interconnection and related judgement\">insolvency and bankruptcy<\/a> proceedings for bank defaulters for a period of six months, with a provision to extend the time for up to one year, CNBC-TV18 said in a news flash.<\/li>\n<li>The move will provide relief to a number of companies that have been battered by the COVID-19 crisis, as these corporations will not be dragged into the IBC proceedings for the time being.<\/li>\n<li>Even so, the verdict may not be a good one for the banking sector, as banks will have to sit on bad assets for a long time to come. They&#8217;re not going to be able to transfer those accounts to IBC for a swift resolution.<\/li>\n<li>It might lead to possible future stress and lower implementation through the resolution process.<\/li>\n<li>As per Icra, the outbreak of COVID-19 and the suspension of new procedures under IBC are expected to result in substantially lower realizations of up to 30-40 percent for financial creditors in FY20-21.<\/li>\n<li>In view of the economic impact of the Covid-19, the Government decided to suspend the IBC proceedings. To fight COVID, the government announced a national lockdown beginning on March 25, which continues with some relaxation even now.<\/li>\n<li>The extended lockout has had a significant effect on companies and has seriously restricted their ability to repay loans to banks.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"In_this_sense_the_IBC_holiday_was_declared\"><\/span>In this sense, the IBC holiday was declared<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Section 10 requires a defaulting corporation to seek access to the <strong>National Corporate Law Tribunal (NCLT)<\/strong> to find it insolvent.<\/li>\n<li>The Government had previously decided to grant this relief to companies from being dragged into insolvency proceedings for the next six months, by way of a proposal from the Cabinet, which was cleared on 22 April but did not set a time limit for which the clause should be considered.<\/li>\n<li>The provision of section \u2014 Section 10A \u2014 is to suspend sections 7, 9, and 10 for a period of six months or until further notice, with a rule that the amendment clause can not be extended for more than one year and will be a one-time measure.<\/li>\n<li>The plan approved by the union cabinet is to push the reforms via the promulgation of an ordinance. Sources said that a formal announcement on the ordinance is now expected after the president&#8217;s nod comes. It should be remembered that the old prosecutions will continue.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"IBC\"><\/span><span style=\"color: #0000ff;\"><strong>IBC<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>The new provision supersedes sections 7, 9, and 10 of the IBC. Section 7 deals with financial creditors initiating insolvency proceedings, Section 9 deals with operational creditors initiating proceedings.<\/li>\n<\/ul>\n<h2 data-start=\"0\" data-end=\"225\"><span class=\"ez-toc-section\" id=\"Gross_NPA_Non-Performing_Assets_over_the_last_seven_years_for_Scheduled_Commercial_Banks_SCBs_in_India\"><\/span><span style=\"color: #000080;\"><strong data-start=\"40\" data-end=\"115\">Gross NPA (Non-Performing Assets) % over the last seven years<\/strong> for Scheduled Commercial Banks (SCBs) in India.<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-30394\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/WhatsApp-Image-2025-11-08-at-08.38.16.jpeg\" alt=\"Gross NPA (Non-Performing Assets) % over the last seven years\" width=\"1117\" height=\"1280\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/WhatsApp-Image-2025-11-08-at-08.38.16.jpeg 1117w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/WhatsApp-Image-2025-11-08-at-08.38.16-262x300.jpeg 262w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/WhatsApp-Image-2025-11-08-at-08.38.16-894x1024.jpeg 894w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/WhatsApp-Image-2025-11-08-at-08.38.16-768x880.jpeg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/WhatsApp-Image-2025-11-08-at-08.38.16-800x917.jpeg 800w\" sizes=\"(max-width: 1117px) 100vw, 1117px\" \/><\/p>\n<h3 data-start=\"232\" data-end=\"281\"><span class=\"ez-toc-section\" id=\"Gross_Non-Performing_Assets_Percentages_March-end_figures\"><\/span><span style=\"color: #000080;\"><strong data-start=\"236\" data-end=\"281\">Gross Non-Performing Assets Percentages (March-end figures)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"color: #000080;\"><strong>summarizing the Gross Non-Performing Assets percentages over the last seven years for Scheduled Commercial Banks in India.<\/strong><\/span><\/p>\n<div class=\"_tableContainer_1rjym_1\">\n<div class=\"group _tableWrapper_1rjym_13 flex w-fit flex-col-reverse\" tabindex=\"-1\">\n<table class=\"w-fit min-w-(--thread-content-width)\" style=\"height: 294px;\" width=\"1073\" data-start=\"283\" data-end=\"651\">\n<thead data-start=\"283\" data-end=\"317\">\n<tr data-start=\"283\" data-end=\"317\">\n<th data-start=\"283\" data-end=\"290\" data-col-size=\"sm\">Year<\/th>\n<th data-start=\"290\" data-end=\"306\" data-col-size=\"sm\">Gross NPA (%)<\/th>\n<th data-start=\"306\" data-end=\"317\" data-col-size=\"md\">Remarks<\/th>\n<\/tr>\n<\/thead>\n<tbody data-start=\"355\" data-end=\"651\">\n<tr data-start=\"355\" data-end=\"384\">\n<td data-start=\"355\" data-end=\"368\" data-col-size=\"sm\">March 2019<\/td>\n<td data-col-size=\"sm\" data-start=\"368\" data-end=\"380\"><strong data-start=\"370\" data-end=\"379\">9.08%<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"380\" data-end=\"384\"><\/td>\n<\/tr>\n<tr data-start=\"385\" data-end=\"414\">\n<td data-start=\"385\" data-end=\"398\" data-col-size=\"sm\">March 2020<\/td>\n<td data-col-size=\"sm\" data-start=\"398\" data-end=\"410\"><strong data-start=\"400\" data-end=\"409\">8.21%<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"410\" data-end=\"414\"><\/td>\n<\/tr>\n<tr data-start=\"415\" data-end=\"531\">\n<td data-start=\"415\" data-end=\"428\" data-col-size=\"sm\">March 2021<\/td>\n<td data-col-size=\"sm\" data-start=\"428\" data-end=\"440\"><strong data-start=\"430\" data-end=\"439\">7.33%<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"440\" data-end=\"531\">Some reports mention 9.11% for Public Sector Banks, but 7.33% is the overall SCB figure<\/td>\n<\/tr>\n<tr data-start=\"532\" data-end=\"561\">\n<td data-start=\"532\" data-end=\"545\" data-col-size=\"sm\">March 2022<\/td>\n<td data-col-size=\"sm\" data-start=\"545\" data-end=\"557\"><strong data-start=\"547\" data-end=\"556\">5.82%<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"557\" data-end=\"561\"><\/td>\n<\/tr>\n<tr data-start=\"562\" data-end=\"591\">\n<td data-start=\"562\" data-end=\"575\" data-col-size=\"sm\">March 2023<\/td>\n<td data-col-size=\"sm\" data-start=\"575\" data-end=\"587\"><strong data-start=\"577\" data-end=\"586\">3.90%<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"587\" data-end=\"591\"><\/td>\n<\/tr>\n<tr data-start=\"592\" data-end=\"621\">\n<td data-start=\"592\" data-end=\"605\" data-col-size=\"sm\">March 2024<\/td>\n<td data-col-size=\"sm\" data-start=\"605\" data-end=\"617\"><strong data-start=\"607\" data-end=\"616\">2.70%<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"617\" data-end=\"621\"><\/td>\n<\/tr>\n<tr data-start=\"622\" data-end=\"651\">\n<td data-start=\"622\" data-end=\"635\" data-col-size=\"sm\">March 2025<\/td>\n<td data-col-size=\"sm\" data-start=\"635\" data-end=\"647\"><strong data-start=\"637\" data-end=\"646\">2.58%<\/strong><\/td>\n<td data-col-size=\"md\" data-start=\"647\" data-end=\"651\"><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<\/div>\n<p>The Gross Non-Performing Assets\u00a0ratio has consistently declined from 9.08% in FY2019 to 2.58% in FY2025, indicating significant improvement in the banking sector\u2019s asset quality.\u00a0The fall reflects better credit discipline, recovery through IBC mechanisms, and write-offs of legacy Non-Performing Assets.\u00a0Public Sector Banks, which earlier had higher stress levels, have shown the most notable improvement, aligning closer to private sector performance by FY2025.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"RBI\"><\/span><span style=\"color: #0000ff;\"><strong>RBI<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li>Out of 12 cases IBC case reported by the <a href=\"https:\/\/carajput.com\/rbi-consulting.php\">Reserve Bank of India ( RBI)<\/a> in 2017, only 6 cases a resolution was reached, while liquidation orders were passed against two companies.<\/li>\n<li>A resolution has occurred in two companies, but the banks have not received payment. In addition, the resolution plan failed in the case of another company and therefore the process has been restarted, according to the report.<\/li>\n<li>The six companies that have found a resolution are Electrosteel Steels, Bhushan Steel, Monnet Ispat, Essar Steel, Alok Industries, and Jaypee Infratech.<\/li>\n<li>A resolution has occurred in Jyoti Structures and Bhushan Power and Steel, but payment is still to be obtained.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Governments_initiative_began_on_NPA_recovery\"><\/span><span style=\"color: #000080;\"><strong>Government&#8217;s initiative began on NPA recovery.\u00a0<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-23181\" src=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/NPA.jpg\" alt=\"NPA Update \" width=\"1280\" height=\"1086\" srcset=\"https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/NPA.jpg 1280w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/NPA-300x255.jpg 300w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/NPA-1024x869.jpg 1024w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/NPA-768x652.jpg 768w, https:\/\/carajput.com\/blog\/wp-content\/uploads\/2020\/06\/NPA-800x679.jpg 800w\" sizes=\"(max-width: 1280px) 100vw, 1280px\" \/><\/p>\n<p>From 2015 to the present, Public Sector Banks have recovered 6.41 lakh crores from NPAs and written-off loans. There is a 2% decrease in net NPA ratio from 8%. From 15.3% to 8.7% of assets were stressed. In 2018, the gross NPA was 14.6%; it is now 7.4%. From a peak of 1.32% in 2014 to 0.05% in the Financial Year 2021\u20132022, fraud in PSU banks has decreased.<\/p>\n<p><iframe loading=\"lazy\" title=\"What is Personal Guarantor? | What is the meaning of Personal Guarantor?\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/4L6D70Zv-bg?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p><b>Popular<\/b><strong> Blogs;<\/strong><\/p>\n<p><a href=\"https:\/\/carajput.com\/learn\/use-of-disclaimers-limitations-and-caveats-by-registered-valuers-in-his-report-ibbi-guidelines.html\">Use of disclaimers Limitation and caveats by registered Valuer<\/a><\/p>\n<p><a href=\"https:\/\/carajput.com\/learn\/fresh-ibc-has-been-suspended-for-one-year-as-per-the-declaration-of-fm.html\">Suspension of Fresh IBC for 1 Year declared By FM<\/a><\/p>\n<p><a href=\"https:\/\/carajput.com\/learn\/overview-on-personal-guarantor-as-per-ibc-code.html\">Overview on Personal guarantor under IBC Code<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Union cabinet confirms 6 month IBC holidays for NPAs; what will be the effect on banks? This will apply to NPAs (non-performing assets) after March 25. This was one of the suggestions that Finance Minister Nirmala Sitharaman revealed in her press conference sequence on the Rs 20 Lakh Crore Economic Package. The central government cleared &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8789],"tags":[8939],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/6372"}],"collection":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/comments?post=6372"}],"version-history":[{"count":5,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/6372\/revisions"}],"predecessor-version":[{"id":21009,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/posts\/6372\/revisions\/21009"}],"wp:attachment":[{"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/media?parent=6372"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/categories?post=6372"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/carajput.com\/blog\/wp-json\/wp\/v2\/tags?post=6372"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}