Companies are going bankrupt rapidly in the country; Government says - 41,000 applications came in 6 years
Rise in Companies Insolvency: On the one hand, the central government is claiming to make it easier to do business in the country, on the other hand, companies are going bankrupt rapidly. Let us know what the government has said in the House on this subject.
Amidst the government's claims of making business easier, the latest government figures have created a contradictory picture. Government figures show that in the last 6 years, about 41 thousand companies in the country have applied for bankruptcy. Here, in just 6 months, their figure has reached close to 2,500. Finance Minister Nirmala Sitharaman gave this information in Parliament on Monday in response to a question asked by BJP MP Rajiv Pratap Rudy. The winter session of Parliament started on Monday and on the first day, questions were asked from the government regarding the bankruptcy applications of companies.
According to the information given by the Union Minister, 40,943 cases have come up under the Insolvency and Bankruptcy Code 2016 from the financial year 2018-19 till now. That is, during this period, about 41 thousand companies have applied for insolvency with the National Company Law Tribunal (NCLT). In his reply, he said that in the current financial year, this figure is till 30 September 2024.
According to the data, NCLT had received 9,243 applications for insolvency in the financial year 2018-19. After that, in the next financial year i.e. 2019-20, the figure increased to 12,373. In the financial year, 3,392 companies, and in 2021-22, 4,855 companies had reached NCLT for insolvency. The number of companies applying for insolvency was 4,730 in 2022-23 and 4,014 in 2023-24. At the same time, during the current financial year, 2,336 companies have reached NCLT for insolvency in the first 6 months.
A company goes for insolvency when it is no longer able to repay its debt. This means that the company has given up on repaying the loan. In such cases, the government has enacted the IBC law intending to resolve disputes between the borrower and the lender and ensure maximum recovery for the lenders.
In his reply, the Union Minister had also said that sector-wise figures have been given in the quarterly newsletter of the Insolvency and Bankruptcy Board of India (IBBI). The government does not have any such data. The minister also briefed about the cases resolved by September 2024. He said the corporate insolvency resolution process was complete in 1,068 cases, in which lenders received a total amount of Rs 3,55,374.74 crore.
