In the same vein, the default rates may also be excessively high in a unsound legal or regulatory environment. In other words, if the conditions under which the banks clients are operating remain unchanged, the default rates may be higher than normal levels due to market risks as well as complicated institutional factors.
The preamble to the Code makes clear the objective of the new law as one to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner, for maximisation of value of assets of such persons to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders.