India’s NPA recovery hits ₹1.04 lakh crore as legal reforms drive progress
India’s recovery of Non-Performing Assets (NPAs) has seen a strong rebound since the pandemic. Banks and financial institutions have managed to reclaim over ₹1.04 lakh crore in 2024-25, up from ₹0.64 lakh crore in 2020-21. The surge comes as legal frameworks and specialised mechanisms handle a record number of cases.
The Reserve Bank of India (RBI) tracks NPA recoveries through reports like Trend and Progress of Banking in India. Data reveals a sharp 66% drop in case referrals during 2020-21 due to pandemic disruptions. However, by 2024-25, referrals skyrocketed to 1.5 crore—far above the 50.8 lakh cases recorded in 2018-19.
Lok Adalats now dominate the process, managing over 98% of all referred NPA cases. Meanwhile, corporate-focused laws like the Insolvency and Bankruptcy Code (IBC) and the SARFAESI Act remain the most effective for actual cash recovery. Together, these two channels account for more than 80% of the total amount recovered.
The IBC, in particular, has maintained a strong track record. Its average success rate stands at around 36%, making it India’s top recovery mechanism. Other frameworks, such as Debt Recovery Tribunals (DRTs) and the SARFAESI Act, continue to handle large volumes of cases steadily.
Despite fluctuations, the overall recovery rate has climbed from 20.2% in 2020-21 to 18% in 2024-25. The increase reflects both improved enforcement and a higher volume of cases being processed.
The latest figures show a clear improvement in NPA recovery efficiency. With ₹1.04 lakh crore reclaimed in 2024-25, banks have strengthened their position against bad loans. Legal frameworks and high-volume mechanisms like Lok Adalats continue to play a central role in managing and resolving these cases.
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