As India’s banks try and resolve the bad loans that have long burdened the industry and pose a significant macroeconomic risk, insolvency professionals stand to get a big career boost. Chartered accountants, cost accountants and company secretaries are said to be rushing to get themselves qualified in their hundreds—and this is said to be just the beginning. If the bankruptcy process unfolds as it’s meant to, thousands of insolvency professionals will be needed to oversee the process and run distressed assets as part of asset-sale programmes, experts said.
The Institute of Chartered Accountants of India (ICAI) alone has enrolled more than 700 practicing chartered accountants (CAs) as insolvency professionals, according to the latest official data. The institute is estimated to have received thousands of inquiries for enrollment, according to industry sources. Similar exuberance is brewing among company secretary and cost accountancy institutes that have officially enrolled about 400-500 people.
“There are three insolvency professional agencies promoted by three statutory regulators of professions, namely, ICAI, ICSI (Institute of Company Secretaries of India) and ICWAI (Institute of Cost Accountants of India),” said MS Sahoo, chairman of the Insolvency and Bankruptcy Board of India (IBBI). “They are frontline regulators of insolvency professionals and they build their capacity.”
The process gained momentum with the government having put the ecosystem in place with the Insolvency and BankruptcyCode (IBC), which stipulates the need for insolvency professionals. They play a crucial role after a company is admitted to the National Company Law Tribunal (NCLT) as part of the process. A three-fourths majority of a committee of creditors will entrust insolvency professionals with the job of either drawing up a defaulting company’s revival plan or liquidating it within nine months.
They are becoming critical for the success of the loan recovery initiative. IBBI, tasked with providing the framework for recovery proceedings, conducts exams that allow the chartered accountants, cost accountants, company secretaries and even advocates to qualify as insolvency professionals. It changed its syllabus in July.
“CAs (chartered accountants) have to play a huge role in the insolvency resolution domain,” said Arijit Chakraborty, a practicing chartered accountant. “However, professional competence, responsibility towards stakeholders and demonstration of the highest ethical standards are required to make the exercise a success and meet the objectives of the legislation.”
A senior ICWAI member said the organisation is getting about hundreds of queries every day as candidates prepare for exams conducted by IBBI.
“We groom our members before they start practicing,” said ICWAI president Manas Kumar Thakur. “Cost accountants were earlier neglected with little options to grow in their career. Insolvency has brought in a bunch of opportunities to these people, who can now obtain their deserved professional credits. But it is not easy to run a company even if for a stipulated period. For that, our IP (Insolvency Professional) agency is helping them through professional orientations and advance training.”
An IP agency, whether run by chartered accountants, cost accountants and company secretaries, has different committees including those related to disciplinary action, training, advance mechanisms, members, research and journals. They are equipped to produce professionals that the industry seeks, not merely those who pass the IBBI exam, experts said.
The ICSI insolvency agency, created a few months ago, is facilitating a whole range of activities.
“A budding profession can go haywire, if not regulated," said Mamta Binani, former president of ICSI. "Through our agencies we are regularly keeping qualified insolvency professionals abreast with the industry developments. This helps them in professional practice. We are witnessing a surge in interest among our members who want to boost their mid-term career prospect.”
Members are in regular touch with the institute through WhatsApp and Google groups as they look to remain updated in an evolving industry. Hundreds of texts or emails are being exchanged every day amid mounting interest among members, said an executive.
Once professionals clear the IBBI exam and obtain a certificate, they need to present it to their respective agencies, which enroll them. Many banks are increasingly tapping such insolvency professionals from all three institutes including ICWA, ICAI and ICSI. Institutes also approach lenders, offering their services with a list of qualified insolvency professionals.
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