mangaluru indias corporate bond market which forms 17 per cent of the countrys gdp against 123 per cent in the us and 74 per cent in south korea is highly concentrated in the aaa rated bonds which may change over time once the insolvency and bankruptcy code ibc brings about successful resolution of stressed asset cases in a time bound manner an assochamcrisil joint study has saidreduction in the timeline for resolution of stressed assets under the ibc would not only enhance confidence of investors but would also make them go in for even less than aaa bonds the study noted presently about 90 per cent of trading is restricted to aaa and aa rated categories with greater certainty of outcome and expectations of a faster resolution because of the ibc the interest of both domestic and foreign investors in lowerrated paper will increase over time it saidcountries such as brazil russia china and the uk had taken steps to reform the bankruptcy laws which along with other governmentspecific macroeconomic structural reforms led to significant growth in the corporate bond markets in their respective financial markets rbi has implemented norms for limiting individualgroup exposures in banks encouraging large corporate borrowers to access the bond markets for funding requirements this along with the code will provide a boost to the indian bond market the study pointed out on the role of the asset reconstruction companies arcs the assochamcrisil study said a structural shift is expected in the indian stressedasset market that would lead to a reset of business models in the arc industry arcs may partner with large funds for increasing their capital base and hence may go for large acquisitions at present despite deceleration in growth arcs asset under management aum is expected to reach rs 1 lakh crore by june 2019the study expressed confidence that an effective implementation of the ibc can help improve the recovery rate of the stressedassets further as it has been proven internationally so far recoveries by arcs have remained below expectations as resolutions were lengthy smaller assets debt up to rs 100 crore typically have a shorter resolution time frame and better recovery rate compared with larger oneswhile the sale of assets or settlements is the most preferred and successful strategy for small accounts reconstruction was the most preferred strategy for large accounts but large accounts during reconstruction could take a legal recourse delaying the recovery proceedings this would remain a challenge for an effective resolution within the proposed timeline in the long run effective implementation of the ibc will help in preserving the value of asset and faster resolution that in turn means arcs will be able to churn capital faster and enhance returnsthe access of arcs to capital sources is also critical because their collective net worth is just about rs 4500 crore crisil estimates as on march 31 2017 and they have a limited room to tackle the present level of npas the new code along with a 100 per cent