Why banks will likely fail to recover Rs 3 trillion from loan defaulters

Lenders have been able to recover less than a third of their bad loans from defaulters under the insolvency resolution process

The Reserve Bank of India’s (RBI’s) new framework for stressed loans that would classify any default in one lender bank as a default in all other lenders’ accounts has been labelled by the government as a way to speed up the bad loan resolution process. While this may help in cleaning up the books of many banks that have borne the brunt of loan defaulters, the amount of money recovered by banks to date through insolvency proceedings seems to indicate that banks might have to write off billions of dollars’ worth of loans in the times to come.

Since the