Modi 2.0: IBC, Air India, reforms and more

With Air India now going back to the Tatas, Prime Minister Narendra Modi has showcased why he is both a welfarist and a straight talking reformist, blending the two roles seamlessly. It has taken a tall leader of Prime Minister Narendra Modi's stature to undo the damage done by Nehru's decrepit socialism 68 years ago.

- SANJU VERMA

The steps taken by the Modi government over the last few years, from enacting Insolvency and Bankruptcy Code (IBC) to sharpening other laws have helped banks recover over Rs 5.5 lakh crore of bad debt, including close to Rs 1 lakh crore from accounts that had been technically written off. Besides IBC, strengthening prudential norms and increasing the provision coverage ratio (PCR) requirement for banks including public sector banks (PSBs) have protected banks from any potential hits. Overall, despite the Covid pandemic, the turnaround in PSBs has been remarkable. The recent reforms and proposed national asset reconstruction company ( NARCL) will help clean up balance sheets of banks and make fresh capital available from the sale of bad assets, which will in turn, push credit growth. While there have been allegations of write off by an incompetent opposition, this is done in accordance with the provisioning norms fixed by RBI. Also, even if a loan has been written off, banks make every attempt to recover it. A write-off is completely different from a waive-off. Write-off is only a technical adjustment, whereas a waiver means banks have given up their right to recover bad debts, from the debtors.And under Modi govt, banks may have written off, but not waived off bad loans.

In fact, thanks to IBC,even loans that had been written off, have been recouped in large measure. For instance,an amount of Rs 99,996 crore has been recovered from such written off loan accounts, which included some major recoveries through the IBC process in case of Bhushan Steel, Bhushan Power & Steel, Essar Steel, among others. Separately, banks have managed to recover money from other writeoff cases such as Kingfisher. Since March, 2018, the government-owned lenders have recovered over Rs 5 lakh crore.