Bankruptcy Code
Overdue corporate accounts in India down due to bankruptcy code, shows IIM study
This story was originally published at 21:29 IST on 20 May 2025
Register to read our real-time news.Informist, Tuesday, May 20, 2025
NEW DELHI – The volume of corporate accounts deemed 'overdue' in India has reduced significantly in terms of the amount and the number of accounts, due to the implementation of the Insolvency and Bankruptcy Code, 2016, according to a study by the Indian Institute of Management, Bangalore.
The Insolvency and Bankruptcy Code has injected discipline in the credit allocation process and has prompted borrowers to adhere to stipulated payment schedules, the study said. The amount of overdue accounts as a percentage of total outstanding on all accounts has reduced from 18% in 2018 to 9% in 2024. Similarly, the number of overdue accounts has reduced from 22% of all accounts to 15% in 2024, the study said.
According to the study, submitted to the Insolvency and Bankruptcy Board of India, the implementation of the Code has brought about significant behavioural changes in the credit ecosystem comprising corporates and banks. Credit monitoring has improved, overdue accounts have fallen in number, and there is a systematic reduction in firms' use of debt, especially long-term, the study said.
"We also find that there is an increasing tendency to settle debts to avoid the CIRP (Corporate Insolvency Resolution Proceedings), which we interpret as a positive sign," the study said. The banks have also shown to efficiently use the new legal apparatus for debt recovery, either by resolution or by liquidation, it said. "We find these changes in the firm and bank behaviour heartening and suggestive of the positive impact of IBC (Insolvency and Bankruptcy Code, 2016) on the lender-borrower ecosystem in India," the study said. End
Reported by Surya Tripathi
Edited by Saji George Titus
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (11) 4220-1000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
