Economic Survey 2023: IBC Brought The Highest Recovery For Banks In FY23
Since the inception of the code, 5,893 corporate insolvency resolution processes have commenced under it.
The Insolvency and Bankruptcy Code was the best measure for banks to recover bad loans in FY23, according to the latest edition of the Economic Survey.
Since the inception of the code in 2016, 67% of the 5,893 corporate insolvency resolution processes that had commenced under the code by September 2022 had been closed, the survey noted.
While 46% of such proceedings ended in liquidation orders, 14% culminated in the approval of resolution plans. The share of proceedings closed on appeal, review, or settlement stood at 21%, with the remaining proceedings being withdrawn.
Over half of the CIRPs ongoing as of September 2022 belonged to the industries sector, followed by 37% in the services sector. In the services sector, 60% of the ongoing CIRPs belong to real estate, renting, and business activities, the survey noted.
"Despite the very low value of the distressed firms to begin with, 69% of distressed assets were rescued by the [IBC]," the survey added. A total of 429 corporate borrowers have been completely liquidated under the code, with it facilitating the realisation of 92% of the value through the liquidation of these companies, the survey noted.
"Realisation by financial creditors under resolution plans in comparison to liquidation value was 201% [under the IBC]," the survey noted. The realisation by creditors, on the other hand, stands at 33% of their overall claims.