Lenders have recovered Rs 3.16 lakh crore out of the admitted claims of Rs 9.92 lakh crore under the Insolvency and Bankruptcy Code (IBC), Reserve Bank of India Governor Shaktikanta Das today said.

This data as of September 2023 translates to a recovery rate of 32% of the lenders’ total claims under the IBC.

The learnings from the IBC suggest the need for "some course correction" with respect to the law, Das said.

According to Das, the major criticisms of the IBC are on two fronts – the time taken for resolution and the extent of haircuts as against the admitted claims.

Coming into force in 2016, the IBC is a key legislation aimed at resolving stressed in a time-bound and market-linked manner.

"If we have to take stock of the IBC implementation journey and its impact so far, there are significant positive indications as well as learnings, suggesting a need for some course correction," Das said, while addressing a conference on the IBC organised by the Centre for Advanced Financial Research and Learning (Cafral).

Elaborating on the positive aspects, Das said in terms of the nature of resolution since its inception, 7,058 corporate debtors have been admitted for bankruptcy resolution, of which 5,057 cases have been closed as of September 2023.

There are 2,001 corporate debtors which are under various stages of resolution, he added.

Quoting data from the Insolvency and Bankruptcy Board of India (IBBI), as of September 2023, of the cases that have been closed, about 16% have yielded successful resolution plans, while 19% have been withdrawn under Section 12A of the IBC where largely the debtors agreed for full or partial settlement with creditors.

About 21% have been closed on appeal or review. In 44% of the cases, liquidation orders have been passed.

However, a fine-combing of the data would indicate that 77% of liquidations were inherited from the earlier Board for Industrial and Financial Reconstruction (BIFR) regime or were already defunct units where substantial value erosion had taken place before their admission under the IBC, he said.

A total of 38% of the cases that yielded a successful resolution were earlier with the BIFR and/or were defunct; and if not for the IBC, their fate would have perhaps remained uncertain, the RBI governor said.