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<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> Press Information Bureau Debt recovery mechanism strengthened with the enactment of Insolvency and Bankruptcy Code (IBC), 2016 - Survey MANU/PIBU/0889/2019 - (04 Jul 2019) </td> </tr> <tr> <td align="left" valign="top"></td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman tabled the Economic Survey 2018-19 in Parliament today. Taking note of the recent successes in recovery of loans since the Insolvency and Bankruptcy Code, 2016 came into effect, the Survey proposes further strengthening of the National Company Law Tribunals (NCLT) and the appellate tribunal. 
The Survey says the ecosystem for insolvency and bankruptcy is getting systematically built out with recovery and resolution of significant amount of distressed assets. Till March 31, 2019, the Corporate Insolvency Resolution Process (CIRP) yielded a resolution of 94 cases which has resulted in the settlement of claims worth Rs.1,73,359 crore. Moreover, as on February 28, 2019, 6,079 cases involving a total amount of Rs. 2.84 lakh crores have been withdrawn before admission under provisions of the Insolvency and Bankruptcy Code (IBC). Further, as per RBI reports, Rs. 50,000 crore has been received by banks from previously non-performing accounts. RBI also reports that additional Rs. 50,000 crore has been "upgraded" from non-standard to standard assets. Taking note of the accelerated recoveries, the Economic Survey says, all these shows behavioural change for the wider lending ecosystem even before entering the IBC process. 
Terming the IBC as "one of the most important economic reforms of recent times designed to effectively deal with non-performing Corporate Debtors, the Survey says "the NCLT infrastructure requires to be scaled up" so as to achieve timely resolution of debt recovery.

"The Government is actively considering measures to address delays and has created six additional posts of the judicial and technical members for NCLAT. Setting up Circuit Benches of NCLAT is under consideration," the Survey points out. 
At present, there are 32 Judicial Members and 17 Technical Members of the NCLT in 20 Benches located in major cities. 
The Survey notes, "the IBC has initiated a cultural shift in the dynamics between lender and borrower, promoter and creditor. Before enactment of the IBC, the recovery mechanisms available to lenders were through Lok Adalat, Debt Recovery Tribunal and SARFAESI Act. While the earlier mechanisms resulted in a low average recovery of 23%, the recoveries have risen to 43% under the IBC regime. 
The Survey says, since enactment of the IBC, India significantly improved its 'Resolving Insolvency' ranking 108 in 2019 from 134 in 2014 where it remained stagnating for several years. Last year India won the Global Restructuring Review award for the most improved jurisdiction. An IMF-World Bank study in January 2018 observed "India is moving towards a new state-of-the-art bankruptcy regime." 
Stating that the future of IBC lies in the hands of young entrepreneurs, professionals and scholars contributing to a robust economic order through a dynamic insolvency framework, the Survey says the government is in the process of creating a suitable architecture comprising programmes and institutions that will help in advancing this goal. The Insolvency and Bankruptcy Board of India (IBBI) has announced the launch of Graduate Insolvency Programme (GIP), the first of its kind, for those aspiring to take up the discipline of Insolvency Programmes as a career or other roles in the value chain. 
Stating that most sophisticated economies have well-developed cross border insolvency laws, the Survey states India has initiated the steps to adopt the UNCITRAL Model Law on Cross-Border Insolvency. The IBBI has also set up two separate Working Groups on Group and Individual Insolvencies.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Debt recovery, Mechanism, Strengthening of</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>