Which one of the following statements is correct with reference to the impact of the Insolvency and Bankruptcy Code (IBC), 2016 on the resolution of non-performing assets (NPAs)? |ForumIAS

Q. Which one of the following statements is correct with reference to the impact of the Insolvency and Bankruptcy Code (IBC), 2016 on the resolution of non-performing assets (NPAs)?

[A] IBC has significantly reduced the time taken to resolve NPAs.

[B] IBC has led to a decrease in the recovery rate of NPAs.

[C] IBC has had no impact on the resolution of NPAs.

[D] IBC has increased the number of NPAs in the banking system.

Answer: A

Notes:

Explanation – The Insolvency and Bankruptcy Code (IBC), 2016 was introduced to provide a time-bound process for resolving insolvency and bankruptcy cases in India. With respect to non-performing assets (NPAs), IBC has been effective in reducing the time taken to resolve these assets.

Before the implementation of IBC, the process of resolving NPAs was lengthy and often dragged on for several years, leading to increased costs and reduced recovery for lenders. However, under IBC, the resolution process is mandated to be completed within a maximum of 330 days, which has helped in expediting the resolution of NPAs.

Source: Forum IAS

The Last Webinar on Mains 2024 | Session by Mr. Ayush Sinha