On April 17, with National Company Law Tribunal (NCLT) giving its final nod, Vedanta officially became the first company to successfully take-over a bankrupt company under the newly-adopted IBC law - and before the deadline. The Insolvency and Bankruptcy Code, which was passed in the Parliament barely two years ago, became bona fide operational when the Reserve Bank of India (RBI) was infused\u00a0with more legislative powers to initiate insolvency proceedings to recover bad loans. The RBI in last June under its newly vested power released the list 'Dirty Dozen' - of the companies who were big corporate defaulters. These 12 companies constituted 25% of India's total NPAs, and were named for immediate resolution under the IBC - which has a 270-day deadline, or 9-month deadline. These companies had bad loans in some cases as high as Rs 45,000 crore. And that's not it. In December, the RBI came up with a list of another 28 companies after giving them six months to pay up their loans. And while Vedanta officially bags Electrosteel Steels, Tata Steel was the first successful bidder under the IBC, awaiting a final nod from NCLT. There are three other bankrupt companies\u00a0that are on the verge of getting resolved. Hitting the nail on the head The highlight of the IBC law was when the government moved swiftly to ensure that individuals who run the company to the ground do not get the ownership back at a discounted price, while banks take haircuts. An Ordinance was passed barring wilful defaulters, defaulting promoters and related persons from the bidding process. Later passed in the Parliament, the Section 29A of the IBC made it clear: Once you make your company an NPA account, you better find out a way to pay up or be ready to lose the ownership. Section 29A became a testing ground in the insolvency case of Essar Steel. The only two bidders - Numetal Mauritius and ArcelorMittal - were found ineligible under Section 29A for past NPA connections, and their bids were rejected. They will get a second chance if they completely strip their connection with defaulting accounts. In case of\u00a0ArcelorMittal, which held stakes in Uttam Galva Steel, a loan defaulter identified\u00a0in RBI's second list has reportedly agreed to pay back its loans. If\u00a0Uttam Galva Steel pays back, it means that\u00a0ArcelorMittal may get eligible again.\u00a0And while it looks like Section 29A is making it a bumpy ride, it is, in fact, required to cleanse the messed up banking system. A good start, but a mixed outcome? Even as the IBC has been conceived with the right intent to seek resolution on distressed assets in a time-bound manner, what data collected by ICRA show that as against amount claimed by lenders, highest bidders have offered between 25% and\u00a043% in case of top four bankrupt steel companies. But when there are cases of loan-evergreening and banks choosing not to identify accounts as NPAs, the steel industry has seen strong bids from a lot of leading domestic and international players in the sector. What's worrying is disappointing participation in some sectors. The two EPC (Engineering, Procurement, Construction) companies on the list, namely Lanco Infratech Limited and Jyoti Structures Limited, have seen limited bidding interest.\u00a0The shipbuilding industry is another example of a sector plagued with sector-specific issues. More NPAs are coming but it's good! On February 12, in a late night diktat, the RBI ordered a complete and immediate overhaul of the NPA resolution process, setting a strict 90-day deadline for classification of defaulting accounts as NPAs and the 180-day deadline for their resolution after which they will have to undergo resolution under the IBC. "After the IBC, the gross NPA of the banks were supposed to go down but a new framework with a strict deadline would mean the recognition of new NPAs in next six months, which could nullify the progress so far," Crisil said. But it also means that the process of bank-clean up will take place in an organized and time-bound manner.\u00a0Crisil also said that the corporate credit quality has improved in last four years, or in the\u00a0Narendra Modi-era.