25/09/2026
Behind the loans settlement
Under India’s Insolvency and Bankruptcy Code (IBC), companies that go through resolution can walk away with their remaining debt legally wiped clean — courts call this a “clean slate.”
2. In the last 10 years (up to March 2026), Indian banks filed claims worth ₹14.14 lakh crore against defaulters — but recovered only ₹4.32 lakh crore.
3. That means nearly ₹9.82 lakh crore was never recovered — a haircut of roughly 69% on average.
4. Recovery rates have gotten worse recently: rating agency ICRA found that in FY26, recoveries against admitted claims nearly halved — dropping to 23% from 46% the year before.
5. Separately, RBI’s own Trend and Progress Report (2021-22) showed recovery rates of 23.8% under IBC, 25.7% under SARFAESI, and just 22.5% through DRT courts — showing courts consistently recover only about a quarter of what’s owed.
6. This is why banks increasingly prefer One-Time Settlements (OTS) over dragging cases through slow-moving DRT courts, where cases have historically taken years and recovered even less.
Under India’s Insolvency and Bankruptcy Code (IBC), companies that go through resolution can walk away with their remaining debt legally wiped clean — courts call this a “clean slate.”
2. In the last 10 years (up to March 2026), Indian banks filed claims worth ₹14.14 lakh crore against defaulters — but recovered only ₹4.32 lakh crore.
3. That means nearly ₹9.82 lakh crore was never recovered — a haircut of roughly 69% on average.
4. Recovery rates have gotten worse recently: rating agency ICRA found that in FY26, recoveries against admitted claims nearly halved — dropping to 23% from 46% the year before.
5. Separately, RBI’s own Trend and Progress Report (2021-22) showed recovery rates of 23.8% under IBC, 25.7% under SARFAESI, and just 22.5% through DRT courts — showing courts consistently recover only about a quarter of what’s owed.
6. This is why banks increasingly prefer One-Time Settlements (OTS) over dragging cases through slow-moving DRT courts, where cases have historically taken years and recovered even less.
