Republic of India | Strength of legal rights index (0-12) (DB15-20 methodology)
The strength of legal rights index measures whether certain features that facilitate lending exist within the applicable collateral and bankruptcy laws. The index ranges from 0 to 12 based on the methodology in the DB15-20 studies.
Development relevance: Movable assets, rather than land or buildings, often comprise most of the capital stock of private firms; this is especially true for SMEs. In economies with a modern secured transactions system, these assets can easily be used as collateral. However, in many developing economies lenders may consider movable property to be an unacceptable form of collateral—either because the law does not recognize nonpossessory interests in movable collateral or because it does not provide sufficient protection for those lenders accepting it. This constraint matters: research shows that in developed economies borrowers with collateral obtain nine times as much credit as those without it. These borrowers also benefit from repayment periods 11 times as long and up to 50% lower interest rates.
Limitations and exceptions: The Doing Business methodology has five limitations that should be considered when interpreting the data. First, for most economies the collected data refer to businesses in the largest business city and may not be representative of regulation in other parts of the economy. Second, the data often focus on a specific business form—generally a limited liability company (or its legal equivalent) of a specified size—and may not be representative of the regulation on other businesses. Third, transactions described in a standardized case scenario refer to a specific set of issues and may not represent the full set of issues that a business encounters. Fourth, the measures of time involve an element of judgment by the expert respondents. When sources indicate different estimates, the time indicators reported in Doing Business represent the median values of several responses given under the assumptions of the standardized case. Finally, the methodology assumes that a business has full information on what is required and does not waste time when completing procedures. In practice, completing a procedure may take longer if the business lacks information or is unable to follow up promptly. Alternatively, the business may choose to disregard some burdensome procedures. For both reasons the time delays reported in Doing Business would differ from the recollection of entrepreneurs reported in the World Bank Group Enterprise questionnaires or other firm-level questionnaires..
Statistical concept and methodology: Data are collected by the World Bank Group with a standardized questionnaire that uses a simple business case to ensure comparability across economies and over time—with assumptions about the legal form of the business, its size, its location and nature of its operation. Questionnaires are administered to more than 13,800 local experts, including lawyers, business consultants, accountants, freight forwarders, government officials and other professionals routinely administering or advising on legal and regulatory requirements.
The Doing Business data are based on a detailed reading of domestic laws, regulations and administrative requirements as well as their implementation in practice as experienced by private firms. The report covers 190 economies—including some of the smallest and poorest economies, for which little or no data are available from other sources. The data are collected through several rounds of communication with expert respondents (both private sector practitioners and government officials), through responses to questionnaires, conference calls, written correspondence and visits by the team. Doing Business relies on four main sources of information: the relevant laws and regulations, Doing Business respondents, the governments of the economies covered and the World Bank Group regional staff.
Publisher
The World Bank
Origin
Republic of India
Records
17
Source
Republic of India | Strength of legal rights index (0-12) (DB15-20 methodology)
The strength of legal rights index measures whether certain features that facilitate lending exist within the applicable collateral and bankruptcy laws. The index ranges from 0 to 12 based on the methodology in the DB15-20 studies.
Development relevance: Movable assets, rather than land or buildings, often comprise most of the capital stock of private firms; this is especially true for SMEs. In economies with a modern secured transactions system, these assets can easily be used as collateral. However, in many developing economies lenders may consider movable property to be an unacceptable form of collateral—either because the law does not recognize nonpossessory interests in movable collateral or because it does not provide sufficient protection for those lenders accepting it. This constraint matters: research shows that in developed economies borrowers with collateral obtain nine times as much credit as those without it. These borrowers also benefit from repayment periods 11 times as long and up to 50% lower interest rates.
Limitations and exceptions: The Doing Business methodology has five limitations that should be considered when interpreting the data. First, for most economies the collected data refer to businesses in the largest business city and may not be representative of regulation in other parts of the economy. Second, the data often focus on a specific business form—generally a limited liability company (or its legal equivalent) of a specified size—and may not be representative of the regulation on other businesses. Third, transactions described in a standardized case scenario refer to a specific set of issues and may not represent the full set of issues that a business encounters. Fourth, the measures of time involve an element of judgment by the expert respondents. When sources indicate different estimates, the time indicators reported in Doing Business represent the median values of several responses given under the assumptions of the standardized case. Finally, the methodology assumes that a business has full information on what is required and does not waste time when completing procedures. In practice, completing a procedure may take longer if the business lacks information or is unable to follow up promptly. Alternatively, the business may choose to disregard some burdensome procedures. For both reasons the time delays reported in Doing Business would differ from the recollection of entrepreneurs reported in the World Bank Group Enterprise questionnaires or other firm-level questionnaires..
Statistical concept and methodology: Data are collected by the World Bank Group with a standardized questionnaire that uses a simple business case to ensure comparability across economies and over time—with assumptions about the legal form of the business, its size, its location and nature of its operation. Questionnaires are administered to more than 13,800 local experts, including lawyers, business consultants, accountants, freight forwarders, government officials and other professionals routinely administering or advising on legal and regulatory requirements.
The Doing Business data are based on a detailed reading of domestic laws, regulations and administrative requirements as well as their implementation in practice as experienced by private firms. The report covers 190 economies—including some of the smallest and poorest economies, for which little or no data are available from other sources. The data are collected through several rounds of communication with expert respondents (both private sector practitioners and government officials), through responses to questionnaires, conference calls, written correspondence and visits by the team. Doing Business relies on four main sources of information: the relevant laws and regulations, Doing Business respondents, the governments of the economies covered and the World Bank Group regional staff.
Publisher
The World Bank
Origin
Republic of India
Records
17
Source