Since then, the Modi government is working towards recovering the loans and stabilizing the banks.
One such major step was the Insolvency and Bankruptcy Code (IBC) passed in 2016.
Broadly two methods are seen- Resolution and Liquidation.
Broadly, the IBC has been much effective than any of the previous loan recovery mechanisms like Debt Recovery Tribunals, Corporate Debt Restructuring Scheme, Joint Lenders’ Forum, S4A, etc.
The quarterly newsletter released by the Insolvency and Bankruptcy Board of India for the quarter ending on 30th September shows a great detail about the work going on under IBC.
Operational Creditors are those who have lent to the defaulting company for covering operational expenses like salaries, dues, purchasing of raw materials, inventory management and sales.