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Covid to drag down recoveries from stressed assets by 40% in FY21: Icra

Suspension of new IBC action to impact resolution; lenders may also have to take bigger haircuts

stressed firms, companies, insolvency, stressed assets
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The ratings agency said realisations from resolution plans could further suffer in FY22 as fresh insolvency proceedings have been suspended for one-year period. Illustration: Binay Sinha

Abhijit Lele Mumbai
The realisation from stressed assets are expected to decline by 30-40 per cent in Fy21 due to the COVID-19 pandemic and the suspension of new proceedings under the Insolvency and Bankruptcy Code (IBC).

According to rating agency Icra amounts financial creditors would get from troubled assets may be Rs 60,000-70,000 crore in the current financial year (Fy21), down from Rs one trillion in FY20.

The resolution of corporate insolvency resolution proceedings (CIRPs) would be impacted in FY21 due to a drop in the number of CIRPs yielding a resolution plan and a rise in haircuts lenders may have to take.

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