IBC's Impact on Defaults and Real Estate Since 2016: A Comprehensive Overview

The Economic Survey reveals that the Insolvency and Bankruptcy Code (IBC) has settled defaults worth Rs 10.2 lakh crore at the pre-admission stage since 2016. Over Rs 3 lakh crore has been recovered for banks, exceeding previous mechanisms. Real estate companies form a significant part of resolved cases.

The Economic Survey reveals that defaults worth Rs 10.2 lakh crore have been settled at the pre-admission stage of insolvency cases since the inception of the Insolvency and Bankruptcy Code (IBC) in 2016. Over one-fifth of the companies undergoing resolution belong to the real estate sector.

In the past six years, the IBC has facilitated the recovery of over Rs 3 lakh crore for banks, surpassing the amounts recovered through previous mechanisms like Lok Adalats, DRTs, and the SARFAESI Act. A total of 31,394 corporate debtors' cases worth Rs 13.9 lakh crore have been disposed of as of March 2024, as stated in the Survey presented in Parliament by Finance Minister Nirmala Sitharaman.

The Survey highlights that the IBC has effectively changed debtor behaviour, leading to a Rs 10.2 lakh crore recovery at the pre-admission stage alone. The government has taken several measures to enhance the insolvency ecosystem, creating an optimal mix of incentives and disincentives for transparent dealings in creditor-debtor relations.

(With inputs from agencies.)