ANI New Delhi

The Insolvency and Bankruptcy Code (IBC), introduced nine years ago, has played a crucial role in resolving stressed debt in India. According to an analysis by CRISIL Market Intelligence, the IBC has directly resolved about Rs 12 lakh crore worth of debt through nearly 1,200 cases of stressed borrowers.

It stated "Insolvency and Bankruptcy Code (IBC) nine years ago has enabled the direct resolution of approximately Rs 12 lakh crore of debt." The report highlighted that the impact of IBC goes beyond just the cases admitted by the National Company Law Tribunal (NCLT).

In addition to resolution under IBC, the report pointed out that nearly 30,000 cases involving around Rs 14 lakh crore of debt were settled even before formal  admission to the NCLT. This showed that the IBC has acted as a strong deterrent, pushing borrowers to settle dues early to avoid insolvency proceedings.

The IBC has brought a major shift in the approach to debt resolution in India, moving from a debtor-in-control system to a creditor-in-control framework. This distinguishes it from earlier systems like the Debt Recovery Tribunal (DRT), Lok Adalat, and the SARFAESI Act. Since 2016, total resolved debt through various mechanisms has touched Rs 48 lakh crore. Of this, the IBC has shown the highest recovery rate of around 30-35%, compared to 22% for SARFAESI, 7% for DRT, and 3% for Lok Adalat.

The flexibility under IBC to change management and restructure debt has also helped, especially in reviving viable businesses. In the past three years alone, about 60% of resolution approvals were completed, although they accounted for only 40% of total debt.