Study on lok adalat's, drt's, sarfaesi and IBC as recovery mechanism in India

Banks clean their balance sheets using Lok Adalats, DRTs, SARFAESI, and IBC. According to former RBI Governor C. Rangarajan's November 2021 post, these resolutions were poor. According to former RBI Governor Raghuram Rajan, 2006.- 2008 bad loans hurt the Indian economy in 2012 and beyond (Sep, 2012). This research aims to determine the efficacy of various bank recovery channels by determining the total amount involved and recovered through each channel.

Data was acquired from the RBI database for the years 2012 to 2021, with an emphasis on the four recovery channels of Lok Adalats, DRTs, SARFAESI, and IBC. The efficiency of the redressal procedure is determined by analyzing the amount of NPAs involved and recovered by scheduled commercial banks over the said time using a one-way analysis of variance test.

In spite of the Insolvency Code of 2016, the report shows that Lok Adalat and SARFAESI are still overburdened with cases. The researchers recognize that IBC is taking a major recovery road and, as such, deserves some time to demonstrate its worth.

It was hypothesized that IBC's implementation in 2016 would revolutionize India's recovery channels; this study sought to determine whether this legal shift had altered the banking sector's ability to recoup bad debt.