India's Bankruptcy Law Gets Global Boost

India's insolvency and bankruptcy framework has received a significant upgrade from S&P Global Ratings, moving from Group C to Group B. This reassessment highlights a more robust and creditor-friendly environment, particularly under the Insolvency and Bankruptcy Code (IBC).

The IBC has demonstrably strengthened credit discipline, tilting the scales in favor of creditors. Promoters now face the risk of losing control of their businesses if they fail to settle outstanding dues, a stark contrast to earlier mechanisms. This shift is supported by a steady record of successful creditor-led resolutions.

While improvements in recovery rates, now above 30%, and reduced resolution times to approximately two years are noted, S&P acknowledges that India's regime still trails more established jurisdictions. Challenges related to delays and legal hurdles persist, yet recent Supreme Court rulings reinforce creditor protections.