Why did S&P Global Ratings upgrade India's insolvency regime?

S&P upgraded India's insolvency regime due to stronger creditor rights, faster resolutions under the IBC, and improved recovery rates.

How have creditor rights improved in India under the IBC?

The IBC has made the resolution process more favorable to creditors, with promoters now risking business control if debts aren't resolved.

What are the current recovery rates in India's insolvency process?

Average recovery rates have improved to over 30%, up from 15-20% under the previous bankruptcy system.

Home / Business and Economy / India's Bankruptcy Law Gets Global Boost

India's Bankruptcy Law Gets Global Boost

4 Dec

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Summary

S&P Global Ratings upgraded India's insolvency regime to Group B.
Creditor rights are now stronger with improved resolution times.
Recovery rates improved to over 30% from 15-20% previously.

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.