Expert panel pitches for national dashboard for insolvency data

The Insolvency and Bankruptcy Code (IBC), which provides for a time-bound and market-linked resolution of stressed assets, has been in force for more than five years now.

The working group on tracking outcomes under the Code has suggested a framework based on ‘Effectiveness, Efficiency and Efficacy’ with respect to Corporate Insolvency Resolution Process (CIRP).

According to the group, chaired by former Sebi Chairperson G N Bajpai, reliable real-time data is essential to assess the performance of the insolvency process.

While proposing the creation of the national dashboard for insolvency data, the panel also said the IBBI has made commendable efforts in publishing quarterly data on the insolvency resolution process in detail.

The data published by the Insolvency and Bankruptcy Board of India (IBBI), a key institution in implementing the Code, include those on insolvency filings, recovery amount and duration of the insolvency process across corporate debtors for all creditors.

In its report, the group said that cross-validation of data sourced from multiple data banks is a challenge in making credible assessments.

Against this backdrop, there can be a “national dashboard of insolvency data by using the existing data sources to the extent possible along with specific insolvency indicators, which the IBBI reports on a quarterly basis”.

Another suggestion is for the IBBI to look at including quantitative data on cost indicators such as court/bankruptcy authority fees, resolution professional’s fees and asset storage and preservation costs in its quarterly updates.

The report noted that data on time, cost and recovery rates will allow a reliable evaluation of the insolvency process with respect to parameters of effectiveness and efficiency.

Further, the report said it was important to track the performance of related economic indicators to assess the performance of the insolvency process for other objectives such as ‘promoting entrepreneurship’ or ‘enhancing credit availability.

“Such an assessment would measure the performance of the system with respect to the ‘efficacy’ parameter.

“The WG (Working Group) recommends a range of indicators such as the number of new companies registered, credit supply to stressed sectors like real estate, construction, metals etc, change in the cost of capital (particularly for stressed sectors), the status of non-performing loans, employment trends, size of the corporate bond market and investment ratio for the related sectors,” it added.