Modi govt’s mixed record on corporate reforms

livemint.com:

₹3 trillion between 2017 and 2022. The exercise gradually showed results: profit margins of public sector banks began improving as lending resumed. “The pain was severe, but beneficial effects started to show up from 2018, resulting in improved asset quality," the Reserve Bank of India noted in October 2023.

By 2022, all troubled banks had exited the PCA, and the gross NPA ratio fell to 3.9% by March 2023. The sector has regained stability. “The stress test results reveal that scheduled commercial banks are well-capitalized and capable of absorbing macroeconomic shocks even in the absence of any further capital infusion by stakeholders," observed the RBI in its latest financial stability report in December 2023.

No bank was expected to breach the minimum capital requirement norm in the next one year, the report said. Other moves were not as successful. The 2016 Insolvency and Bankruptcy Code (IBC) was also supposed to be a game-changer that would bring structure to companies’ insolvency proceedings through a time-sensitive approach.

But it didn't live up to expectations and was bogged down by litigation and amendments. It has already been amended more than 90 times, according to Crisil Ratings. Until 2023, a total of 7,325 companies had entered the insolvency process, of which 74% of the cases stood closed and the rest were at various stages of resolution.

Among the closed cases, just a third benefited from the process—16% of the cases yielded successful resolution plans, and 19% were withdrawn as lenders agreed for settlement. Others were settled or closed on appeal or review (21%), or ended in liquidation orders (44%). Meanwhile, in the last five years, while resolutions have become lengthier, and the recovery rate