Last month, 13 economists, including IMF chief economist Gita Gopinath and former RBI governor Raghuram Rajan, praised Indias bankruptcy law while charting an economic strategy for the country heading for general elections later this year. Their policy advice for the financial sector covered reviving projects when bank balance sheets are cleaned up, improving governance in state-owned banks, and strengthening the corporate bond market.
The two-year-old Insolvency and Bankruptcy Code (IBC) is panning out okay. But it needs to work better to realise maximum value from the sale of assets of bankrupt companies. This will reduce both haircuts that banks have to take and the load on taxpayers to recapitalise banks.
The Committee of Creditors (…
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