Mumbai: Nine years after the launch of the Insolvency and Bankruptcy Code (IBC), India has managed to resolve debt worth more than Rs26 lakh crore, either directly or indirectly, a new report said on Tuesday. Out of the total amount, around Rs12 lakh crore of debt was resolved through about 1,200 cases of stressed borrowers after they were admitted to the National Company Law Tribunal (NCLT), as per data compiled by Crisil Ratings.

However, a bigger impact of the IBC has been in creating fear among defaulting borrowers, which helped settle nearly 30,000 cases involving Rs14 lakh crore of debt even before these cases could be formally admitted by the NCLT.

Since its launch in 2016, the IBC has replaced the earlier debtor-friendly system with a creditor-in-control approach.

This major shift has made IBC more successful compared to earlier debt recovery methods like the Debt Recovery Tribunal (DRT), Lok Adalats, and SARFAESI. Data shows that the average recovery under the IBC has been 30-35 per cent, which is much higher than 22 per cent under SARFAESI, 7 per cent under DRT, and just 3 per cent through Lok Adalats.