Finance Minister Nirmala Sitharaman said on Saturday that the Insolvency and Bankruptcy Code (IBC) brought in for debt-ridden companies should not lose its sheen.
Finance Minister Nirmala Sitharaman (File Pic)
Finance Minister Nirmala Sitharaman said on Saturday that the Insolvency and Bankruptcy Code (IBC) brought in for debt-ridden companies should not lose its sheen. At an event organized here on the occasion of the 6th Annual Day of the Insolvency and Insolvency Board of India (IBBI), the regulatory body for debt resolution process, Sitharaman talked about the past six years of the IBC Act and the way forward. This law was implemented in the year 2016.
The country is in a period of strong economic activity: Sitharaman
Sitharaman said that we cannot ignore the signs of tension emerging in this path. IBBI was formed under the IBC Act itself. On this occasion, the Finance Minister, referring to the current economic situation, said that the country is in a period of strength in economic activities. On the issue of inflation remaining at high level, he said that even now this level is manageable.
Chairman of the National Company Law Tribunal, retired Justice Ramalingam Sudhakar and Chairman of the Competition Commission of India Ashok Kumar Gupta were also present at the event. According to IBBI, till June this year, 1,934 corporate debtors have been provided relief under the IBC Act.
Let us tell you that out of 3,247 cases that became part of the insolvency process, almost half of the cases have been settled through liquidation and only 14 per cent cases have been settled through asset sale. This has been claimed in a report prepared on the basis of analysis of data received from the Insolvency and Insolvency Board of India (IBBI).
According to a report, on an average, only 31 percent of the loans have been recovered in various resolution processes. According to an analysis by credit rating agency Icra Ratings, a study of all the cases filed in the five years till December 2021 after the Insolvency and Insolvency Code came into force, shows that the pace of insolvency process is very slow. Lenders or financial firms have to bear the maximum loss in their books on the liquidation of a company.
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