India’s banks are set for a $7.6 billion earnings this month as the country’s bankruptcy court has made sudden progress in clearing a backlog of many cases Bloomberg reported.
The lenders would recover from four companies that are Essar Steel India Ltd., Prayagraj Power Generation Co., Ruchi Soya Industries Ltd. and RattanIndia Power Ltd.
Banks are expected to recover 415 billion rupees from Essar, having received a 54 billion rupees payment from the Prayagraj bankruptcy on Friday.
Another 43.5 billion rupees is expected from Ruchi Soya on Monday and 27 billion rupees from RattanIndia later this week, the people added.
Banks will welcome the news as India’s banking crisis and the slowdown in the economy are making them face increase in their $130 billion pile of bad loans.
The total proceeds from the bankruptcy cases should total 540 billion rupees ($7.6 billion), according to Karthik Srinivasan, group head of financial sector at ICRA Ratings, the local arm for Moody’s Investors Service.
India has seen slow progress since the bankruptcy court was set up in 2016 to get to grips with the bad loan crisis. Only 15% of cases admitted to the court had produced a resolution plan as of September, according to data published by the insolvency board.
However, some of the logjam was broken with the Supreme Court decision last month to clear the way for ArcelorMittal SA’s $5.9 billion takeover of Essar Steel.
However, the December bonanza will be shortlived as India’s prolonged economic downturn continues to push up overall bad loans, Suresh Ganapathy, who oversees financial research at Macquarie Capital Securities told Bloomberg.