Insolvency and Bankruptcy Code Returns Rs 3.4 Lakh Crore to Banking Sector: IBBI Chairperson
Insolvency and Bankruptcy Board of India (IBBI) Chairperson Ravi Mital has announced that the insolvency code has successfully returned a whopping Rs 3.4 lakh crore to the banking and financial services sector over the last eight years. Speaking at the second edition of RESOLVE-2024, an international convention on insolvency resolution and valuation, Mital highlighted the significant impact of the Insolvency and Bankruptcy Code (IBC) in resolving the issue of non-performing assets (NPAs).
Mital emphasized that the annual numbers of resolutions are on the rise, with an average of 125 resolutions per year over the past eight years. In the last year alone, 270 resolutions were completed, indicating a positive trend towards faster resolution of insolvency cases. He credited the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) for their role in expediting the resolution process.
Furthermore, Mital noted that a large number of applications have been settled even before the formal resolution process could begin, with 28,000 applications withdrawn and debts amounting to Rs 9.5 crore settled. This proactive approach by borrowers reflects a positive shift in the mindset towards resolving financial issues without the need for formal insolvency proceedings.
Mital also highlighted the successful resolution of various sectors including steel plants, hotels, road projects, and real estate projects, showcasing India’s progress in insolvency resolution compared to other countries. He urged resolution professionals to continue their efforts in resolving cases efficiently and as going concerns, emphasizing that liquidation should be avoided whenever possible.
ICAI President Ranjeet Kumar Agarwal added that IBC 2.0 is currently in the works, with more amendments expected to further strengthen the insolvency and bankruptcy laws. Agarwal also mentioned the IBBI’s focus on valuation of plant and machinery, highlighting the importance of value creation in the banking system and the evolving nature of insolvency and bankruptcy laws in India.
Overall, the success of the Insolvency and Bankruptcy Code in returning significant amounts to creditors and resolving insolvency cases efficiently underscores the positive impact of the legal framework in addressing financial distress and promoting sustainable growth in the banking sector.