IBC returned Rs 3.4 lakh cr to banks, financial sector in eight years: IBBI Chief

Insolvency and Bankruptcy Board of India (IBBI) Chairperson Ravi Mital on Friday said insolvency code has returned Rs 3.4 lakh crore to the banking and financial services sector in the last eight years of its existence. Mital also said the annual numbers of resolutions are also on the rise.

“Insolvency and Bankruptcy Code (IBC) will be completing eight years in two to three months. IBC has directly returned Rs 3.4 lakh crore to the creditors in the period. We used to talk about record NPAs during 2017 and 2018. The NPA number that was then talked was Rs 12 lakh crore. Out of that, we have returned Rs 3.4 lakh crore. Now NPAs are at record low,” Mital said at the second edition of RESOLVE-2024 -- international convention on insolvency resolution and valuation by the Institute of Chartered Accountants of India (ICAI).

Mital also points out that the number of annual resolutions is now picking up. “In the last eight years, on an average, we have done 125 resolutions every year. In the last year, 270 resolutions have been done. This means we are speeding up. And the credit goes to NCLT and NCLAT. I am sure this year we will break our record and do more than 270 resolutions,” Mital said. 

Mital also mentions that a large number of applications have been settled even before the  beginning of the resolution process. “28000 applications have been withdrawn and underlying debt of Rs 9.5 crore has been settled even before the IBC process could begin. Borrowers have started returning the money without coming to the resolution, IBC. This is the first law in which promoters are losing their company,” he said. 

“We have resolved steel plants, hotels, road projects, and real estate projects. We in India have done a far better job than most of the countries,” he added. 

He, however, calls upon the resolution professionals to do even better. “Do it in the fastest possible way. Resolve it as a going concern. Liquidation does not help anyone. In large projects, part resolution is the only way forward,” Mital added.

ICAI President Ranjeet Kumar Agarwal says IBC 2.0 is currently in the works and more amendments are likely to come soon. Agarwal also says the IBBI is currently working on valuation of plant and machinery. “In our country, value creation is essential, and we have witnessed the lowest non-performing assets (NPA) in the banking system over the last decade, 2.8% of the total advances. Banks are now focusing on infrastructure and sustainable growth. The insolvency and bankruptcy laws are evolving and setting new benchmarks,” Agarwal adds.