Early Intervention Under IBC Signals Shift in Borrower Behaviour, Says IBBI Executive Director
Kolkata, May 10 – More than 30,000 insolvency cases involving defaults of ₹13.78 lakh crore were settled before their formal admission under the Insolvency and Bankruptcy Code (IBC) till December 2024, according to Jitesh John, Executive Director of the Insolvency and Bankruptcy Board of India (IBBI).Speaking at the 8th Annual Conference on IBC hosted by CII Eastern Region, John highlighted a significant shift in credit discipline among Indian borrowers, attributing it to the deterrent effect of the IBC framework.
IBC Contributed Nearly Half of Bank Recoveries
Citing data from the RBI's Trend and Progress of Banking in India 2023–24 report, John noted that of the ₹96,000 crore recovered by scheduled commercial banks through various channels, ₹46,000 crore—nearly 48 percent—came via IBC.He further added that as of March 2025, 1,194 Corporate Insolvency Resolution Processes (CIRPs) had been completed, leading to a recovery of ₹3.89 lakh crore for creditors, which is approximately 32 percent of admitted claims. Creditors also recovered 170 percent of the liquidation value and 93.36 percent of the fair value through resolution plans.
Reviving Defunct Firms and Economic Impact
Interestingly, about 40 percent of resolved CIRPs involved defunct companies. Despite their status, these entities were successfully revived through IBC proceedings, contributing to economic revitalization and job creation. In such cases, claimants realized 150.33 percent of the liquidation value and 18.96 percent of admitted claims.John also referenced a study by IIM Ahmedabad, which confirmed that in resolved cases, creditors recovered 32 percent of admitted claims and 168 percent of liquidation value.
Post-resolution, the average total assets of companies increased by 50 percent, capital expenditure rose 130 percent, and market valuation surged from ₹2 lakh crore to ₹6 lakh crore. Liquidity improved by 80 percent, underscoring the transformative effect of the IBC regime.
AI, Blockchain Suggested for Faster and Transparent Resolution
Arun Kumar Yadav, Chief General Manager – SARG at State Bank of India, emphasized the use of Artificial Intelligence (AI) to fast-track case admission, assess resolution plans, and draw interest from potential bidders for distressed assets.He also recommended refinements to the IBC for faster issuance of liquidation orders and more efficient handling of Preferential, Undervalued, Fraudulent, and Extortionate (PUFE) transactions.
Bijay Murmuria, Chairman of the CII ER Banking & Financial Services Subcommittee and Director of Sumedha Fiscal Services Ltd, echoed the potential of AI in predicting potential insolvencies and supporting judicial processes. He also suggested that blockchain technology could ensure secure and tamper-proof data sharing, improving transparency in insolvency proceedings.
The developments underscore a growing focus on tech-driven solutions and proactive resolutions in India's insolvency ecosystem, with the IBC proving pivotal in restructuring distressed assets and improving financial discipline.
