India is currently in the middle of a massive public sector bank cleanup plan through a speedier insolvency proceeding and bank recapitalisation, but only at a time when the bad loans situation has escalated as one of the worst in the world, being red-flagged by the World Bank. The World Bank has said that by September 2016, the non-performing\u00a0assets in public sector banks had reached 12% of total advances - "significantly higher" than in private banks or the "high levels" experienced in the Republic of Korea during the East Asian financial crisis. The Asian financial crisis began in July 1997 on financial contagion and struck most of East Asia including the Republic of Korea, China and Thailand. According to International Monetary Fund (IMF), during 1997-1998, some large business conglomerates ran into financial difficulties and non-performing loans (NPLs) at Korean banks sharply increased. Recently, a report by CARE Ratings said that India's bad loans were fifth largest in the world. According to the data compiled by the Economic Survey conducted by the government of India, India's Gross Non-Performing Advances (GNPA) ratio of PSBs increased from 12.5% to 13.5% between March 2017 and September 2017. "Large volumes of nonperforming assets are concentrated among fewer than 50 creditors, but banks have been slow to initiate default proceedings. Worryingly, corporate stress is spreading to smaller companies," the World Bank said in\u00a0a draft Systematic Country Diagnostic (SCD) for India. It added:\u00a0On the corporate side, 40 percent of the debt was owed by companies that did not earn enough to pay the interest on their loans. The World Bank, however, lauded the Insolvency and Bankruptcy Code (IBC), saying that it is a "major advance which is expected to promote faster exit of unviable firms". The report by the World Bank is a first and one of its kind draft seeking comments from stakeholders. According to Reuters, for the quarter ending September, India's total bad loans shrunk slightly to Rs 9.46 lakh crore from the record high of Rs 9.5 lakh crore, the first pull-down experienced in six years after the implementation of the Insolvency and Bankruptcy Code (IBC) and stricter\u00a0norms. Responding to slow debt restructuring processes, the RBI earlier this week subsumed 28 schemes and came up with a uniform and a strict 180-day timeline for resolving loan defaults, failing which the lenders will have no choice but to move to insolvency court. So far, the RBI has identified\u00a0about 40 big companies constituting 33% of total bad loans, which will be undergoing the insolvency proceeding under the IBC. Analysts are also saying that the recently announced new NPA framework will also lead to a speedier identification of NPAs, which were earlier kept hidden. The government, too, announced a massive Rs 2.11 lakh crore bank recapitalisation plan to improve the health of the PSBs to push up the credit lending capacity, along with a 6-point reform framework.