March 2017 ?? In a statement in Dec 2015 ? The total stressed assets as estimated at the start of 2016 was $120 billion or Rs.8 lakh crore
. One has to be in fantasy land to assume that much stressed assets could be declared and cleaned up with 15 months.
It's worth pointing out that RBI's own Dec 2015 Financial Stability Report
makes no such rosy prediction:
2.16 The macro stress test for credit risk suggests that under the baseline scenario, the GNPA ratio may rise to 5.4 per cent by September 2016 from 5.1 per cent in September 2015, but could subsequently improve to 5.2 per cent by March 2017. However, if the macroeconomic conditions deteriorate, the GNPA ratio may increase further, and it could rise to around 6.9 per cent by March 2017 under a severe stress scenario.
The progressive growth in gross NPAs is seen in this document
The Insolvency and Bankuptcy Code wasn't even passed until May 2016, shortly before Rajan demitted office.
RBI's latest summary of the situation is described in its June 2018 Financial Stability Report
. It estimates gross NPAs rising to Rs.11 lakh crore by end of this fiscal, or about 12% gross NPA ratio.
The IBC is certainly playing a part in pushing more debt to be declared NPAs. Without such a declaration, it's not possible to initiate the IBC proceedings. Further, the IBC marks a radical departure from debtor-in-possession norms, to creditor-in-control. In other words, until IBC, when a company's loans became NPA, the company owners still retained control, and continued to work out an arrangement with the banks. The banks themselves, lacking control over the process, often had to extend terms suiting the company owners.
IBC changes things dramatically - rather than the company owners maintaining control and dictating terms, the IBC insolvency professionals take over for the creditors, and specify a time-bound process of handling the restructuring efforts. EY's IBC document is a worthwhile read
. Another document from EY from late 2017 with an IBC status update
. And a August 2018 IBC status update from PWC