Introduction: India NPA Crisis

In the corporate world, a delay in payments does not necessarily indicate failure but is usually a cry for assistance. Like a patient who presents symptoms requires prompt treatment, companies under financial strain require the correct diagnosis and prompt intervention. India's experience with non-performing assets (NPAs) has been a reflection of this truth.

What are NPAs and why do they matter?

Imagine a loan as a rented house, if the tenant does not pay rent, the landlord's earnings decline. Likewise, when companies default on loans, banks (our landlords) miss anticipated returns. These bad loans, and NPAs, can impede lending, undermine investor confidence, and slow economic growth.

The magnitude of the problem
The NPA crisis in India have sky-rocketed to exorbitant levels in the 2010s. Gross NPAs in Scheduled Commercial Banks attained ₹10.3 lakh crore, approx. 11.2% of advances in March 2018. That is to say that over 1 rupee out of every 10 advance was not being repaid on time. Core sectors like infrastructure, power, and steel were affected.

How did we arrive here?

Exuberant lending post-2008: Banks overleveraged in the global financial stimulus, relying on quick payoffs.

Project Delays: Delayed projects in infrastructure, stuck clearances, and cost escalations made it difficult to fix.

Lax Due Diligence: Loans were granted in some cases without proper screening and sectoral awareness.

Shocks Local and Global: Commodity collapses and policy freeze during UPA-II years further battered balance sheets.

The Turnaround Begins: Legal and Regulatory Overhauls

Similar to a detox for the banking system, India set about purging bad loans. Inflection Point came in the year 2016 with implementation of the Insolvency & Bankruptcy Code. It brought in a time-bound insolvency process to settle, max 270 days.Promoters ran the risk of losing management unless they were prompt in addressing defaults. Asset Reconstruction Companies (ARCs) picked up speed, with more open regulatory guidelines. One-Time Settlement (OTS) schemes provided a final window for promoters to settle dues and get back on track—without giving up ownership.

Imagine the IBC as an emergency department: the more delayed the arrival of the patient, the worse are the options for treatment. But early admission improves the chances of recovery. 

So where do things stand today?

As of FY2024:

Gross NPAs came down to ~3.2%, a 10-year low. Recovery rates increased to 32–40%, from less than 15% prior to IBC.

Challenges that persist:

Delays in NCLT proceedings under law

Strategic litigation by promoters

Constraint in appetite from strategic investors for small cases

Absence of professional restructuring support for mid-sized borrowers

Enter Credit Curators:

We don’t just diagnose, we treat as credit curators. For companies sliding into stress, we introduce capital partners, negotiate with lenders, and devise turnaround solutions that value the enterprise. We do this in cases where time, trust, and traction are in short supply.

Conclusion:
Effective resuscitation still hinges on taking action in time, professional guidance, and proper strategies for funding. For companies in the red zone, there is a path to revival and credit curators assist in navigating it.