Discussing the reasons for high Non-Performing Assets (NPAs) in banking critically examine the utility of Insolvency and Bankruptcy Code (IBC) and National Asset Reconstruction Company Ltd (NARCL) for reducing financial stress on banks.

The IBC completed 5 years of its launched. Additionally, in the budget 2021, the government announced setting up a National Asset Reconstruction Company Ltd to deal with soured companies. All these efforts are meant to release companies and banks from distress. Reasons for high NPAs in banking sector (1) Unchecked lending after 2008 financed various to boost liquidity (Economic Survey 2021) (2) Priority sector lendings to MSME, low-productivity sector such as education

sure unto NPAs. (3) From loan waivers. (4) Bank frauds, Tajt Mehul choksi fraud, if yes bank fraud. (5) Poor audit mechanism in banks Utility of IBC and NARCL in reducing financial stress on banks (1) Insures and recovery for distressed companies, which help in shaping bank. (2) Enable easy exit for companies, thereby preventing the phenomena of overhang of loans for distressed companies. (3) Rescus NBRCL remove distressed loans from the book of bank, thus,

cleaning of banker balance sheet. However, IBC and NARCL have not been able to provide complete relief to banking sector due to:- (1) Delays in the process - Eq. disc years on average in IBC against 180 days limit (2) Huge haircut lead to loss of value of asset. (3) Numerical problem, such as tax auditing is not corrected. thus, an integrated approach that deal with NPAs, along with insurance support to companies can help deal with banking distress.