Evolving with changing scenarios will be crucial for Insolvency and Bankruptcy Code (IBC) as it could become the most potent instrument in driving proactive responsible behavior among lenders and prove to be a boon for the economy, Corporate Affairs Minister Rao Inderjit Singh said on Saturday.
He was speaking at an international research conference on insolvency and bankruptcy organized by the Indian Institute of Management Ahmedabad (IIM-A) in collaboration with Insolvency and Bankruptcy Board of India (IBBI).
“While the Code has had a remarkable journey so far, going forward, evolving with changing scenarios will be crucial… Like everything else, this reform should keep evolving,” the Minister of State for Corporate Affairs said.
“As IBC evolves further, it could become the most potent instrument in driving good credit behavior and ethical business practices amongst borders and proactive responsible behavior among lenders, proving to be a boon for the economy and to the nation… We must learn from the outcomes and strengthen the Code so that the law is robust over time, ”Singh said.
The minister said streamlining the CIRP (Corporate Insolvency Resolution Process) and liquidation process will further help in consolidating the progress made to secure gains to the economy.
He said the proposed cross-border insolvency framework is a “landmark step” in redefining India’s relations with the rest of the world.
The minister said that the use of the recently-introduced pre-packaged insolvency resolution process for corporates and SMEs – “unique and tailor-made as per the defining needs of our country” – will allow one to analyze the process and address emerging challenges in this sphere.
He said that resolution of financial service providers under the Code is a welcome development for the IBC – which provides for a time-bound and market-linked resolution of stressed assets.
The IBC has till now evolved and attuned to every emerging market requirements through behavioral changes among debtors and creditors, giving boost to the startup ecosystem, and providing required market price discovery process, Singh said.
It also assumed greater significance post the pandemic by preventing viable firms from being prematurely pushed into insolvency and thereby saving both lives and livelihoods, he said