The Insolvency and Bankruptcy Board of India (IBBI) is a key institution that has been established to regulate India’s insolvency and bankruptcy proceedings. It plays a major role under the Insolvency and Bankruptcy Code which provides a time-bound process for resolving insolvency issues in companies and among individuals.
Emergence of IBBI
- Insolvency reforms were needed to address India’s challenges with mounting NPAs or bad loans and to improve the ease of doing business rankings where resolving insolvency was an area needing improvement.
- The Insolvency and Bankruptcy Code passed in 2016 provides the overall legal framework to deal with insolvency in India.
- Subsequently, IBBI was set up in October 2016 as a regulatory statutory body to govern the functioning of ecosystem entities under the Code like Insolvency Professionals, Insolvency Professional Agencies and Information Utilities.
Role and Functions of IBBI
Roles and Functions
- Registering and regulating Insolvency Professional Agencies, Insolvency Professionals and Information Utilities
- Setting standards and codes of conduct for professionals and agencies
- Monitoring performance and compliance through grievances and complaints redressal
- Periodic reporting to the central government on insolvency cases
- Conducting research and recommending regulations on areas like cross-border insolvency
Structure and Composition
- Headed by a Chairperson and members appointed by the central government
- Dr. M.S. Sahoo has been Chairperson since October 2016
- Members are drawn from fields like finance, law, debt recovery, accountancy, etc.
- The board has executive and non-executive members as part of its structure
Progress Achieved
Some key progress milestones
- 3200+ insolvency professionals registered
- 16 Information Utilities given Certificate of Registration
- 9 Insolvency Professional Agencies in place
- Over 5000 cases resolved with claims worth ₹ 3.5 lakh crores as per latest data of Feb 2024
Initiatives and Regulations Formulated
- Regulations like Procedural Guidelines for Information Utilities, Model Bye-Laws and Governing Board composition standards formulated.
- Guidelines introduced for Group Insolvency and Cross-Border Insolvency.
- Regulations for insolvency resolution processes for various classes of individuals and businesses.
Key Statistics
- Over 22,000 bankruptcy cases involving defaults of over ₹3 lakh crores resolved as of December 2023 under the IBC
- Average resolution period: 340 days (As per IBBI annual report 2022-23)
- Recovery rates improved from 26.5% under previous systems to 71.6% under the IBC as per RBI studies
Regulations Notified
- 16 regulations covering processes like corporate insolvency resolution, corporate liquidation, individual insolvency resolution and voluntary liquidation notified by IBBI
- Regulations also introduced for insolvency professionals, information utilities, inspection and investigation authorities
Disciplinary Cases
- 49 disciplinary cases against insolvency professionals were ongoing as of September 2023
- 38 insolvency professionals were issued show cause notices by IBBI in relation to processes under the Code
Insolvency Professional Entities Registered
- Over 275 Insolvency Professional Entities registered with IBBI as of February 2024
- These entities include Limited Liability Partnerships, registered partnerships and companies
Information Utilities
- Close to 15.7 crores financial records pertaining to defaults received and verified by registered Information Utilities under IBC framework as of December 2023
Resolution Plans and Cases
- Nearly 6,500 cases involving corporate debtors admitted into the Corporate Insolvency Resolution Process(CIRP) as of September 2023
- Resolution plans approved in more than 3,200 cases by the National Company Law Tribunal
Capacity Building
- Over 1,100 academic collaborations signed between IBBI and academic institutes for training programs
- 75,940 participants trained through 902 educational, training and awareness programs organized under the aegis of IBBI as of March 2023
Recent Developments in Feb 2024
Global Insolvency Summit
- Titled ‘Towards a Cross-Border Insolvency Framework’.
- Held from 10-12 Feb 2024 in Mumbai with over 800 global participants.
- Focus areas included UNCITRAL Model Law, integration challenges, and importance of information utilities.
The IBBI continues to build capacity while registering an increasing number of entities and professionals under the IBC framework as evident in the growth of the ecosystem over the years. By resolving cases expeditiously, it is facilitating credit markets and promoting entrepreneurship in India.