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November 16, 2015

Bankruptcy reforms in India: How they affect the India's Doing Business ranking

In a recent post published in Ajay Shah's blog, Rajeswari Sengupta discusses how the draft bill proposed by the Bankruptcy Law Reforms Committee (BLRC) would change India's "Resolving Insolvency" score in the World Bank's Doing Business Index.


The BLRC recently released its report that suggested a number of reforms in order to overhaul the existing bankruptcy processes. Some of the salient features of the recommendations of the committee include creating a new institutional framework comprising Insolvency Professionals, Information Utilities, the National Company Law Tribunal, and a regulator for dealing with insolvency, and ensuring that delays in the processes are minimised. If the bill were to become law it would significantly improve India's Resolving Insolvency score placing it ahead of many developed and emerging economies. However, Sengupta cautions against using the World Bank's Doing Business ranking as the yardstick for measuring improvements in the country's business and regulatory environment. While an improved score is welcome, the reforms in the bankruptcy laws will only be considered a success when they lead to improved outcomes in terms of "recovery rates, equal treatment of unsecured creditors, treatment of bond holders, etc.


Read the full post here.

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