NEW DELHI: FM
Nirmala Sitharaman
on Thursday said that the seven-year-old Insolvency & Bankruptcy Code (
IBC
) has helped rescue 3,171 distressed companies and assisted in the closure of unviable ones — a sharp contrast to less than 3,500 cases being resolved by the erstwhile Board of Industrial and Financial Reconstruction (
BIFR
) during its life of over 30 years, starting 1987.
In a social media post, the FM said the law enacted by the Modi govt has also helped improve corporate governance as there is a “credible threat” that a promoter or management can lose control over a company that defaults in repaying to creditors.
Pointing to a shift towards more responsible credit behaviour, she said, up to March 2024, over 28,000 applications involving defaults of over Rs 10 lakh crore were withdrawn before their admission as companies opted to clear the dues of creditors.
FM said that the law had brought a paradigm shift in the debtor-creditor relationship and provided a streamlined, one-stop solution for resolving insolvencies, while prioritising resolution over liquidation and helping preserve jobs and the value of assets.
“IBC has played a key role in helping banks recover from the NPA crisis created by @INCIndia and its allies during the UPA years through ‘phone banking’ and indiscriminate lending. IBC has built trust and transparency in the
financial system
,” Sitharaman tweeted, while vowing to strengthen the capacities of NCLT and NCLAT by expeditiously filling vacancies.
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