IBC rules for NBFC resolution credit positive for banks, says Moody's

Rating agency Moody's on Monday said the amendments to India’s bankruptcy code enabling the resolution of finance companies are credit positive for banks.

India's banks are largest lenders to non banking finance Institutions (NBFI). The provisions in the IBC provide for the orderly resolution of a stressed company. Until now, the only resolution framework for NBFIs was through liquidation.

"We expect an orderly resolution process via the IBC will help limit losses for creditors as compared with liquidation," Moody's said in a statement.

On November 18, 2019, the government (Baa2 negative) amended the country’s Insolvency and Bankruptcy Code (IBC) 2016. It allows for