Top 20 IBC cases must be reviewed monthly by PSBs, said DFS Secretary

The Secretary of the Department of Financial Services (DFS) has mandated a monthly review of the top 20 cases under the Insolvency and Bankruptcy Code (IBC) by PSBs (Image: Shutterstock)

Financial services secretary Vivek Joshi on December 22  asked chiefs of state-run banks to review the top 20 IBC cases of each bank every month.

"Top 20 IBC cases must be reviewed monthly by managing directors of public sector banks as there are delays in admission of cases," said Joshi.

He also said that the Union Finance Minister will do a review of NARCL soon.

On February 25, 2015, in the Union Budget 2015-16, the then Finance Minister Arun Jaitley announced the formation of a comprehensive bankruptcy code of global standards. Further, Jaitley introduced the Insolvency and Bankruptcy Code, 2015, in the sixteenth Lok Sabha.

To do a detailed analysis of the Code, a joint parliamentary committee was formed, which submitted a new draft of the bill on April 28, 2016. Later in 2016, the parliament passed the Insolvency and Bankruptcy Code (IBC) which was termed as a much-needed, long-awaited reform for the insolvency process in the country.

The Code aimed to expedite and simplify the process of bankruptcy proceedings alongside facilitating fair negotiations between the borrower and creditors. Timely resolution of stressed assets that could ensure maximum recovery from these assets was a key element of the Code.

Simply put, IBC helped in the creation of a mechanism to resolve the deadlock between stressed borrowers and lenders, made defaulting companies more conscious about debt, and gave lenders a tool to maximise their recoveries.

Data in a September report by the ratings and research agency CareEdge showed that the number of cases in April-June FY24 jumped to 6,815, compared to 5,250 in the corresponding quarter last year.

In the same period, data of some of the top lenders showed that recovery has been following a downtrend on a year-on-year (YoY) basis.