The Insolvency and Bankruptcy Code (IBC) needs reform six years after its launch to speed up resolution and recovery from insolvency firms, according to rating agency CRISIL.

       The government has cleared the appointment of 18 new members to National Company Law Tribunal and sought public opinion for better functioning of the Committee of Creditors (CoC)—steps needed to improve IBC’s working.

       CRISIL, in a statement, said quick rollout of insolvency frameworks for group/cross-border, financial service providers, and personal insolvency will further expand the ambit of IBC, rating agency said in a statement.

       IBC needs a stronger push after Rs 2.5 trillion recovery, around one-third of the admitted financial claims from insolvent firms. This marks a significant shift in the insolvency resolution process and credit culture in India.

       A closer look at the data shows, however, the recovery rate and resolution timelines have a lot more room for improvement. This makes a continuous strengthening of the Code and stabilisation of the overall ecosystem imperative.

       Only a few large cases have seen higher recovery. Excluding the top 15 cases (by resolution value) from the 396 resolved cases, the recovery rate halves to 18 per cent.

       The average resolution time for the resolved cases is 419 days: compared with the maximum of 330 days. About 75 per cent of outstanding cases have already been pending for more than 270 days.

       Nitesh Jain, Director, CRISIL Ratings Ltd, “Besides low recovery rate and longer timeframe, a key challenge is the high number of cases going to liquidation.