The parliamentary standing committee on finance has called for a review of the Insolvency and Bankruptcy Code (IBC), factoring in the lacunae and roadblocks surfaced in implementing the almost eight-year-old law, so that the “very purpose behind its enactment is not defeated”.
In a report on the action taken by the government on its 2021 recommendations on the IBC, the committee led by BJP leader Jayant Sinha said “actual recoveries on the ground” from the stressed assets are just 25-30% (against creditors’ admitted claims).
It highlighted that inordinate delays in the resolution process are resulting in value erosion of stressed assets.
Increase in NCLT strength: The panel has also recommended that the sanctioned strength of the National Company Law Tribunal (NCLT) be enhanced from the current 62 members to tackle the huge pendency of more than 20,000 cases at the end of every year. The committee noted that the member strength of NCLT has risen to 57, a vast improvement from 34 when the panel had submitted its report in 2021. It acknowledged that for the first time, the NCLT strength would be more than 90% of its sanctioned strength.
The report was tabled in the Lok Sabha on Tuesday.
Regulating RPs: The committee remained apprehensive about the capability of resolution professionals (RPs) in carrying out time-bound resolution of huge companies with complex cases and pushed for revisiting the rules regarding functioning of RPs.