Insolvency and Bankruptcy Board of India (IBBI) chairperson Ravi Mital today said on Tuesday that the Insolvency and Bankruptcy Code has helped creditors recover ₹3.5 lakh crore over the last eight years. Mital added that the recoveries are enabling the banks and financial institutions to lend more for economic activity, thereby contributing to GDP growth.
Speaking at the eight annual day of IBBI today, Ravi Mital said, “In eight years, one thousand resolutions have been approved by the National Company Law Tribunal. This means an average 125 resolutions per year. But in the last two years, the NCLT has approved 450 resolutions. 45% of the total resolutions have been approved in the last two years.”
“IBC has helped direct recovery of about ₹3.5 lakh crores to the creditors. Recover worth ₹1 lakh crore has been done in the last two years. That is 30% recovery has taken place in the last two years. This is what the current NCLT leadership and its members have done. If we continue like this, people will stop talking about delays in NCLT and IBC,” Mital added.
Mital said that recovery through the IBC is aiding the GDP growth and it enhances banks’ capacity to support economic activity. “Resolution helps the cause of Viksit Bharat. At the height of the NPA crisis, banks' NPAs were about ₹12 to ₹13 lakh crore. Out of this, ₹3.5 lakh crore has been recovered under the IBC process. How does this help? Recovery of ₹3.5 lakh crore must have helped the creditors in sanctioning further loans of ₹35 lakh crore. This is what the IBC has achieved,” said Mital.
Quoting data from an IIM Ahmedabad report, Mital said the study points out that the sales of companies resolved through IBC have been growing at 25% per annum. “Their market cap has increased by six times in three years. The IBC has provided direct money to the creditors, enabling them to lend more, and unproductive assets have become productive and are growing at good speed adding to the GDP of our country,” Mital said.
Chief economic adviser V Anantha Nageswaran said that looking at eight years of the IBC from a resolution perspective, the reform has significantly altered the bankruptcy landscape in India. “Data shows that creditors have, on average, realised 32% of the admitted claims and 168% of the liquidation value in cases resolved in IBC,” he added.
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