Countrys insolvency regime is still inadequate to cater to the needs of those Indian corporates going for global acquisitions, rating agency Fitch Ratings on Tuesday said.
The insolvency regime still suffers from issues such as lengthy processes, lack of a unified bankruptcy code and uncertainties related to recovery outcomes, Fitch said.
Though the country had initiated steps to amend the Companies act and unify the bankruptcy code by setting up a National Company Law Tribunal, the provisions are yet to be taken, Fitch said.
The general bias of Indian insolvency legislation had been in favor of the debtor, rather than the creditors.
Despite the tradionally strong emphasis on the taking of security, the timeliness and ease of enforcement has remained uncertain, Fitchs Senior Director, Asia-Pacific Corporate Ratings, said.
Fitch said increasing cross-border acquisition activities by Indian corporates and the use of international debt financing for such transactions have also propelled insolvency issues, Fitch said.
Fitch rates 6,000 financial institutions across the world, including about 3,200 banks and 2,400 insurance Companies, 1,700 corporates, it added.