The Government used a two-pronged strategy to solve the twin balance sheet problem. They are recapitalisation of banks to increase the provisioning for Non-Performing Assets (NPA) and the introduction of the Insolvency and Bankruptcy Code (IBC) Bill. You can read about the Non Performing Assets (NPA) – Reasons, Classification, Impact, and Measures to Control NPA in the given link.

Further readings:

1. RBI – Reserve Bank of India [UPSC Indian Economy Notes]
2. Bad Banks – Idea Proposed by Indian Banking Association (IBA) Due to COVID-19