Insolvency and Bankruptcy Code: Revolutionizing India's Financial Governance

The Insolvency and Bankruptcy Code has revolutionized India's financial sector, ushering in significant shifts in credit culture and corporate governance, a new study by the Indian Institute of Management, Bangalore reveals.

The research draws upon extensive data from the Insolvency and Bankruptcy Board of India and other financial institutions, covering the period from 2017 to 2023, and shows a clear improvement in credit discipline post-implementation of the IBC. Borrower's repayment behavior saw marked enhancements, with overdue loan accounts decreasing sharply.

The findings further underscore a reduction in borrowing costs for distressed firms and improved governance through increased representation of independent directors. The IBC not only fortified debt resolution but also fostered a resilient financial ecosystem in India.

(With inputs from agencies.)