New Delhi: The Vice President M. Venkaiah Naidu has said the enactment of Insolvency and Bankruptcy Code was one of the success stories of Indian economic reforms and that it played a critical role in reshaping the behaviour of borrowers.
Speaking after inaugurating the Insolvency Research Foundation (IRF), on Friday, the Vice President said that Insolvency and Bankruptcy Code (IBC) has helped set the stage for superior renegotiation between the lenders and borrowers.
Quoting a report by Insolvency and Bankruptcy Board of India (IBBI), the Vice President said that “Since 1 December 2016, nearly 1500 Corporate Debts have been brought before CIRP and 142 have already been closed, while 63 have been withdrawn. As many as 302 cases have ended in liquidation, while the resolution plans have been approved in 72 cases.
Asserting that an efficient insolvency law was vital to stability in financial systems and fundamental to economic growth and wealth creation, the Vice President said that a sound insolvency and bankruptcy process would enable rapid resolutions for problems or risks posed by entrepreneurship.
“Without a bankruptcy law, if an organization defaults on a loan, each claimant races to grab its share of the organization’s assets. This battle among the claimants can push the organization into liquidation regardless of whether it has a generally stable business model,” he said.
Saying that the essence of the insolvency process was to aid against such challenges and encourage entrepreneurship, business, and more risk-taking, he said that it was, therefore, crucial to continue to invest in the development of the law by studying its impact and investigate its strengths and weaknesses on a regular basis.
Naidu said that academics play a very important role in supporting policy development, industry research and finding innovative solutions in advanced countries and called for a similar and a more robust collaboration between academia and industry in improving the culture of research in India, especially in matters relating to insolvency and bankruptcy.
Naidu appreciated the government for initiating a series of economic reforms to improve the investment climate in diverse areas and make India an attractive destination. The reforms have added a new dimension to the development story of India.
The Minister of State for Finance & Corporate Affairs, Shri Anurag Thakur, the former Judge, Supreme Court of India and Chairperson, National Company Law Appellate Tribunal, Shri S.J. Mukhopadyay, the Secretary, Ministry of Corporate Affairs, Shri Injeti Srinivas, the Chairperson, IBBI, Dr. M.S. Sahoo, the DG CEO, IICA, Dr. Sameer Sharma and other dignitaries were present on the occasion.