India corporate credit cycle remains stable despite IBC delays

India’s corporate credit cycle is expected to remain stable in the near term, according to a report by Kotak Institutional Equities. The stability is attributed to strong corporate balance sheets, moderate debt levels, and a capital expenditure cycle primarily funded through internal cash flows, which helps mitigate risks to lenders’ asset quality.

While fresh corporate stress remains stable, the report notes challenges within the Insolvency and Bankruptcy Code (IBC) framework. Data shows that 177 Corporate Insolvency Resolution Processes (CIRPs) were admitted in the first quarter of FY27, compared to 668 cases throughout FY26. There is a notable trend of financial creditors initiating more cases, with 116 of the 177 recent cases coming from this group.

Efficiency issues persist in the insolvency process, characterized by significant delays and low recovery rates. The average resolution time for 1,500 resolved cases was 757 days, exceeding stipulated timelines. As of June 2026, approximately 76 per cent of ongoing CIRPs had exceeded the 270-day threshold. Furthermore, cumulative recoveries under the IBC stand at approximately Rs 4.6 lakh crore against nearly Rs 14 lakh crore of resolved debt, resulting in an average haircut of nearly 70 per cent.