FM Nirmala Sitharaman.
Credit: PTI Photo
Bengaluru: Ahead of the last phase of the Lok Sabha polls, Finance Minister Nirmala Sitharaman, on Wednesday, highlighted the outcomes of the Insolvency and Bankruptcy code, saying that it has brought a paradigm shift in the debtor-creditor relationship and provides a streamlined, one-stop solution for resolving insolvencies.
In a post on social media site X, Sitharaman criticised the Congress, saying the party always shied away from taking progressive steps for India’s growth and encouraged only regressive policies. The IBC came into force in 2016.
Sitharaman said that from its inception in 2016 till March 2024, the IBC has rescued 3,171 distressed companies and assisted in the shutdown of unviable firms, whereas the erstwhile Board of Industrial and Financial Reconstruction (BIFR) resolved less than 3,500 cases in the nearly 30 years since its inception in 1987.
“Despite the crying need for enacting insolvency laws, the UPA regime consciously sought to reward its cronies at the cost of the banks and operational creditors who had to run from pillar to post for recovering their dues,” she said.
The minister said that by laying down governance norms for companies in distress, the IBC has taken corporate governance to new heights in the country.
“The credible threat that the resolution process under IBC could take the defaulting company away from the current promoters/management has resulted in better corporate governance,” she said, adding that prior to IBC, corporate distress proceedings were governed by a patchwork of legislations, which worsened rather than resolving issues.
“Overall, an amount of Rs 3.36 lakh crore has been recovered by creditors, which is around 32% of what was claimed and 162% of the liquidation value. On average, resolution plans are yielding about 85% of the fair value of the distressed companies,” she noted.
The IBC framework is continually evolving, she said, adding that the government has taken numerous steps to strengthen the insolvency framework and ensure resolutions happen in a timely manner.
“We remain committed to strengthening capacities of NCLT and NCLAT across the nation by expeditiously filling vacancies,” she said.