The good news is that the Indian banks overall will get close to Rs.54,000 crore between December and January as a large backlog of NCLT cases are likely to be cleared with alacrity. That would make a big positive impact on the third quarter result of most PSU banks. The lenders (mostly PSU banks) are expected to benefit from the recovery process from four NCLT referred stressed companies; Essar Steel, Prayagraj Power Generation, Ruchi Soya and Rattan India Power Ltd. It may be recollected that Essar Steel was taken over by Arcelor Mittal owned by Lakshmi Mittal and Ruchi Soya was taken over by the Patanjali group owned by Baba Ramdev.

The total proceeds from these bankruptcy cases will be close to Rs.540 crore ($7.6 billion). The banks will be using a large part of it “to enhance provisioning as bad loans continue to rise; with new cases adding up. Thanks to the Supreme Court, last month some of the log jam was broken with the decision to clear the way for Arcelor Mittal bid. Banks will be able to use this money to expand provisions, spruce up capital and also expand their loan books.