Insolvency and Bankruptcy Code

Accordingly, the improvement in such parameters has helped realise better profitability for the banks, the rating agency said. However, subdued credit growth and surplus liquidity continue to be a drag on the profit margins for the sector.

Official sources said that discussion on having a pre-packaged resolution framework for all categories of debtors is being discussed at the highest level and a decision may be taken once state owned bad bank -- National Asset Reconstruction Co. Ltd (NARCL) -- is operationalised. In April, Government operationalised pre-packaged insolvency resolution (PIRP) framework for MSMEs that is based on the 'debtor-in-possession' model which involves a resolution professional monitoring the entire process to ensure transparency.

The IBBI data showed that operational creditors triggered 50.93 per cent of the CIRPs, followed by about 42.77 per cent by financial creditors and remaining by the corporate debtors. However, about 80 per cent of CIRPs having an underlying default of less than Rs 1 crore, were initiated on applications by operational creditors, while about 80 per cent of CIRPs, having an underlying default of more than Rs 10 crore, were initiated by financial creditors.

In a discussion paper, the Insolvency and Bankruptcy Board of India (IBBI) noted that the regulatory framework of liquidation process has been improvised on several occasions during the last five years to address the difficulties faced by stakeholders, meet the evolving requirements and in aid of achievement of objectives of the Code.

Citing data from the Insolvency and Bankruptcy Board of India (IBBI), the Minister of State for Corporate Affairs, Anurag Thakur told the Lok Sabha that a total of 1,126 companies have been ordered for liquidation as of December 31, 2020.