Resolution through IBC continues to delay, says India Ratings

The delay is due to process-related challenges such as legal tussles between stakeholders, case execution bandwidth, delay in judgments, information asymmetry and a lack of standardisation

Loan recovery through the Insolvency and Bankruptcy Code (IBC) continues to face delays, ratings agency India Ratings said in a report on November 28.

“Resolution through IBC route continues to lengthen with those resolved in July-September FY24 quarter touching an all-time high of 662 days for financial creditors with a consistent increase across all creditor classes for the past three years,” the ratings agency said in the report.

The reasons, the ratings agency said are due to process-related challenges such as legal tussles between stakeholders, case execution bandwidth, delay in judgments, information asymmetry and a lack of standardisation.

India Ratings added that recoveries from the resolution are slowly reverting to the pre-IBC days after the initial success when they were in the range of 40-45 percent.

Also read: Recovery continues to be less in IBC cases, data from banks, CareEdge show

CIRP

The timeline for the resolution of the Corporate Insolvency Resolution Process (CIRP) continues to increase for financial creditors (FCs), operational creditors (OCs) and corporate creditors (CDs). The timeline recorded for the July-September FY24 quarter has been the highest at 659, 662 and 563 respectively, the agency said.

Data from banks

The country’s largest bank, the State Bank of India (SBI), recovered Rs 3,607 crore compared to Rs 5,208 crore last year. Recovery for Bank of Baroda fell to Rs 2,600 crore from Rs 3,014 crore in a year.

Punjab National Bank (PNB) also saw a similar trend, wherein its recovery fell to Rs 5,417 crore in April-June FY24 from Rs 7,057 crore in the corresponding quarter last year.