Curriculum Bad Loans, NPAs and the IBC
Bad Loans, NPAs and the IBC
India's bad loan story: what NPAs are, the lending boom and bust, the 2015 asset quality review, the Insolvency and Bankruptcy Code, big cases, recoveries and delays, Section 29A, recapitalisation and mergers, bad banks, frauds, cleaner balance sheets, and a recap.
- What Bad Loans Are A non-performing asset is a loan on which the borrower has stopped paying interest or principal for 90 days, and a large pile of them can cripple a banking system. 📄 Read-aloud
- The Lending Boom and the Bust of the 2010s Banks lent heavily to infrastructure and steel in the 2000s, and when projects stalled and prices fell, bad loans surged. 📄 Read-aloud
- The Asset Quality Review of 2015 RBI Governor Raghuram Rajan pushed banks to recognise hidden bad loans in 2015, causing reported NPAs to jump. 📄 Read-aloud
- The Insolvency and Bankruptcy Code, 2016 IBC created a time-bound process where creditors take control of a defaulting company and try to revive or sell it, replacing earlier slow methods. 📄 Read-aloud
- Big IBC Cases: Essar Steel, Bhushan and Jet Airways Large cases such as Essar Steel and Bhushan Steel were resolved through takeovers, while Jet Airways ended in liquidation. 📄 Read-aloud
- Recoveries, Haircuts and Delays IBC has recovered more than earlier methods but takes longer than intended, and creditors often take large haircuts. 📄 Read-aloud
- Bad Loans, NPAs and the IBC: Checkpoint 1 Quick checkpoint - five questions on bad loans, npas and the ibc. 5 questions
- Section 29A and Promoters' Role IBC bars wilful defaulters and certain promoters from bidding for their own companies, to stop them regaining assets cheaply. 📄 Read-aloud
- Recapitalisation and Bank Mergers The government injected about ₹3 lakh crore into public sector banks and merged several to make them stronger. 📄 Read-aloud
- Bad Banks and Asset Reconstruction Asset reconstruction companies buy bad loans from banks, and a national bad bank, NARCL, was set up in 2021 to take over large stressed loans. 📄 Read-aloud
- Frauds and Governance: PNB and Beyond Banking frauds such as the ₹14,000 crore PNB case showed that weak controls, not only economic cycles, cause losses. 📄 Read-aloud
- Cleaner Balance Sheets and What Comes Next By the mid-2020s, bank NPAs fell to multi-year lows, but new risks such as unsecured personal loans and microfinance stress have emerged. 📄 Read-aloud
- Bad Loans and the IBC: Recap A recap of India's bad loan problem and the reforms that followed. 📄 Read-aloud