Amount recovered through various channels dropped in 2020-21: RBI report

In 2020-21, the amount recovered as a percentage of the amount involved, or recovery rate, was 14.1 per cent, compared to 22.1 per cent the previous year, owing primarily to pandemic-related challenges. Despite the suspension of new insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) for a year until March 2021, it constituted one of the major channels of recoveries in terms of amount recovered.

The IBC route yielded more than Rs 27,000 crore, while around Rs 27,700 crore was recovered through the SARFAESI Act. During 2020-21, all recovery channels, particularly Lok Adalats, witnessed a  decline in the of cases referred for resolution.

“Allowing pre-pack resolution window for MSMEs is expected to assuage the mounting pressure of pending cases before NCLTs, reduce haircuts and improve declining recovery rates," the RBI said.