M Rajeshwar Rao, Governor, Reserve Bank of India

New Delhi [India]December 18 (ANI): Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao has stressed the importance of institutionalizing data under the Insolvency and Bankruptcy Code (IBC) to facilitate the handling of complex Cases provide valuable insights and precedents.

In his inaugural address at an international conclave jointly organized by IBBI and INSOL India in New Delhi on December 7, the Director General of the Reserve Bank of India said that such data needs to be collected in a structured manner so that it can be disseminated for benefit. All relevant stakeholders.

While acknowledging the substantial progress made in cleaning up the bank’s balance sheet, the deputy governor also highlighted potential areas for improvement. The event brought together distinguished experts and practitioners from different jurisdictions to share insights and experiences in insolvency resolution. The RBI Director General said there was a need to better understand the reasons behind defaults. “Whether taking into account the general economic environment, specific industry challenges or professional mismanagement, this perspective can help develop appropriate solutions,” he said, suggesting that delays caused by a lack of cooperation from some corporate debtors should be addressed. Insolvency proceedings, such as delays in filing information, withholding valuable details, using litigation to delay progress, or creating indirect obstacles to deter potential resolution applicants, are critical. Finally, he added, examining valuations, including insights into how collateral type affects realization and valuation, the impact of time on recovery, and the relationship between resolution timelines and valuation results can provide insights that can help improve the process. information. “Perhaps better valuation at the time of appraisal is the key,” he added. He further added that the difference in valuation between the appraisal stage and the resolution stage indicates excessive valuation exuberance and a possible lack of proper due diligence. The RBI Director General further said that a mechanism needs to be put in place to link principles-based resolutions under out-of-court resolutions with those under the statutory umbrella of IBC so that resolutions initiated out-of-court can be transitioned and brought under IBC implementation. Thinking of these measures can make the Code an effective option for unlocking economic value in businesses, even as we ensure strict enforcement of the provisions of the Code to prevent the emergence of recalcitrant or unscrupulous borrowers,” he added. (Ani)