Daily News Analysis

RBI Governor pushes for group insolvency mechanism

stylish_lining

Context: RBI Governor Shaktikanta Das advocates for a specified framework for the group insolvency mechanism and a vibrant market for stressed assets in India to enhance the functionality of the Insolvency and Bankruptcy Code (IBC).

News:

  • Legislative changes to establish appropriate principles for the group insolvency mechanism, addressing challenges like intermingling of assets, defining a 'group,' and handling cross-border aspects are suggested.
  • Emphasis is placed on the absence of a robust market for stressed assets in the country, limiting prospective resolution applicants under IBC, even for regulated entities outside the IBC process.

Need of insolvency mechanism:

  • Recovery rates under IBC stand at 32%, with creditors realizing Rs 3.16 lakh crore out of admitted claims of Rs 9.92 lakh crore as of September 2023.
  • The IBC has led to a substantial behavioural shift, evident from the withdrawal of 26,518 applications for initiation of Corporate Insolvency Resolution Processes (CIRPs) till August 2023 but there are concerns about the time taken for resolution and the extent of haircuts in comparison to admitted claims.
  • Data reveals delays in the resolution process, with 67% of ongoing CIRP cases surpassing the total timeline of 270 days, raising concerns about substantial erosion of asset value.
  • Adjudicating Authorities express concerns about the conduct of the Committee of Creditors (CoC) in insolvency proceedings, highlighting issues such as lack of participation, coordination, and prioritization of individual interests over collective interests.

Insolvency

It is a state of financial distress in which a person or business is unable to pay their debts. Insolvency is when liabilities are greater than the value of the company, or when a debtor cannot pay the debts they owe. 

Indian Ports Act, 2025

Why is the Indian Ports Act, 2025 in the News? The President of India has granted assent to the Indian Ports Act, 2025, which replaces the previous Indian Ports Act of 1908. This new Act aims t
Share It

Private Sector in Defense Production

The growth in private sector participation in India's defense production marks a significant shift in the country’s defense strategy and industrial landscape. The private sector share in
Share It

India-Mauritius

The visit of the Prime Minister of Mauritius to Varanasi marked a significant milestone in strengthening the India-Mauritius bilateral ties. Describing India as a trusted partner in Mauritius'
Share It

solar manufacturing ecosystem

India's ambitious plan to develop a fully indigenous solar manufacturing ecosystem by 2028 is an essential step towards achieving energy security, sustainability, and enhancing its position as
Share It

Political Unrest in Nepal

Nepal’s ongoing political unrest, exacerbated by Prime Minister K P Sharma Oli’s resignation and youth-led protests, has created a volatile environment that directly impacts India&rsqu
Share It

Karnataka Platform-Based Gig Workers

Karnataka has recently passed the Karnataka Platform-Based Gig Workers (Social Security and Welfare) Bill, 2025, aimed at safeguarding the rights and welfare of gig workers. Key Provisions of t
Share It

Income Tax Act 2025

The Income Tax Act, 2025 has received Presidential assent and will replace the Income Tax Act, 1961. The new Act is designed to simplify tax laws, modernize existing provisions, and improve the ef
Share It

Cotton Sector

The Union Government has taken significant steps to support the cotton sector in India, addressing key challenges related to rising imports, farmer welfare, and low domestic production. These meas
Share It

Aircraft Leasing: Wet and Dry Lease

In light of the ongoing global aircraft shortage exacerbated by the COVID-19 pandemic and supply chain disruptions, airlines have increasingly turned to wet and dry leases as solutions. These leas
Share It

India and Israel Sign New Bilateral Investment Treaty (BIT)

India and Israel have recently signed a Bilateral Investment Treaty (BIT), marking a significant development in their bilateral relationship. This agreement, which replaces the older BIT signed in
Share It

Newsletter Subscription


ACQ IAS
ACQ IAS