Insolvency and Bankruptcy Code, not a panacea for Non-Performing Assets

Abstract

Among the many headwinds facing banks and financial institutions (FI’s) on account of burgeoning nonperforming assets, corporate malfeasance, slowdown in the economy, delays in NPA resolution through the Insolvency and Bankruptcy Code, etc., the latest to catch the attention of the financial markets and the media is the risk faced by banks/FI’s on account of mismatch between the maturity profile of assets and liabilities, known as liquidity risk. This has become an increasingly important parameter for the assessing a bank/FI.