Insolvency rules in need of course correction: Das

RBI governor Shaktikanta Das called for a ‘course correction’ in the Insolvency and Bankruptcy Code, citing the time taken for resolution and the extent of haircuts vis-a-vis the admitted claims. He stressed the need to assign varying degrees of weightage to different categories of creditors based on the level of risk they have borne since the outset.

“If we have to take stock of the implementation journey of the IBC and its impact so far, there are significant positive indications as well as learnings, suggesting the need for some course correction,” said Das.

He was speaking at an event organised by the Centre for Advanced Financial Learning (CAFRAL) here.

The governor called for a financial creditor-led framework for the resolution of stressed assets. “Any amendments to the IBC and its evolution thereof may continue to lay emphasis on a financial creditor-led resolution framework, in an overarching manner,” said Das. He added that introducing a pre-packaged insolvency resolution process (PPIRP) for corporate debtors could be a game changer given the challenges in out-of-court settlements. The PPIRP envisages creditors agreeing on a resolution process beforehand and implementing it through insolvency.