Experts urge Govt to prioritise IBC overhaul in first 100 days
Industry experts are urging that In the first hundred days of the new Modi 3.0 government, the Corporate Affairs Ministry (MCA) should focus on fixing implementation issues around IBC and dealing with judicial delays that hinder its efficiency. As against the IBC-mandated time-bound resolution process of 330 days (including litigation and other judicial processes), the average time taken for resolution completion is now over 800 days. While the IBC mandates a time-bound resolution process, judicial delays hinder its effectiveness. The National Company Law Tribunal (NCLT) oversees the resolution process and is often overburdened with cases, leading to delays.
Reserve Bank of India (RBI) Governor Shaktikanta Das had earlier this year flagged that the inordinate delays in resolving stressed assets in bankruptcy courts eroded their value.
There is a significant delay in the admission of cases under IBC. The average time taken for case admission during FY21 and FY22 stood at 468 days and 650 days, respectively.
Another important issue impacting the outcome of IBC is the absence of discipline and adherence to timelines among corporate debtors, creditors, and insolvency professionals. Today debtors, creditors, and the resolution applicants are not subject to any regulatory discipline.
