Comparison between CIRP & PPIRP

s we all are aware, due to the onset of COVID- 19, many big and small companies across the world have signed for Insolvency. Governments across the globe have started to respond and take measures.
In India, the threshold of filing insolvency application was increased last year, from Rs. 1 lakh to Rs. 1 Crore as a prevention for the Micro, Small and Medium Enterprise (MSMEs) from Insolvency proceeding. In recognition of the need, the Government started exploring the feasibility of implementing a ‘pre-packaged’ bankruptcy scheme, to aid the existing insolvency framework and cut cost and time of the resolution process, and promulgated another Ordinance amending the IBC and introducing Pre-pPack for MSME
The RBI’s prudential framework requires bankers to identify incipient stress in an account by classifying it as a special mention account (SMA) [SMA-0: overdue less than 30 days, SMA-1: overdue between 31-60 days, and SMA2: overdue between 61-90 days]. PPRIP is all about an early alarm, i.e. the moment an account slips into SMA-0 rather than processing for CIRP when it becomes an NPA.
For the ease of understanding the PPIRP process, attached is a document explaining the differences in the processes involved - Comparison between CIRP and PPIRP
Happy reading !
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