There has been a reduction in the addition of fresh NPAs over the last two years due to the implementation of the Insolvency and Bankruptcy Code (IBC), according to Injeti Srinivas, Secretary, Ministry of Corporate Affairs, Govt of India.
He was speaking at the inaugural session of a three-day international conference on ‘Insolvency and Bankruptcy Laws: Global Response’, organised by ICFAI Law School, in association with Delaware Law School, Widener University, and Insolvency and Bankruptcy Board of India.
Citing Reserve Bank of India data, he said NPAs have come down by about ₹2 lakh. The code has also brought in competition for entrepreneurship and capital, he said.
At present, for every one case settled under the National Company Law Board Tribunal, nine have been settled outside the tribunal.
During the pre-IBC regime days, it used to take over four years for resolution for sick companies, and it cost 9 to 10 per cent in insolvency cost to manage the assets. The recovery rate was around 25 to 26 per cent.
However, in the last two years, this has improved. The recovery rate in the 80-odd cases that have been resolved has been 48 per cent, and the insolvency cost has been less than 1 per cent, he said.
Speaking on the various aspects of economic freedom, MS Sahoo, Chairperson, Insolvency and Bankruptcy Board of India, said the ease of doing business would also mean how much freedom those who participate in business enjoyed.
“As this law (IBC) liberates resources, the code has changed the course (of businesses) from a hopeless end to endless hope,” he added.
via IBC brings down NPAs, says top Govt official – The Hindu BusinessLine