The government on Monday introduced bankruptcy bill in parliament aimed at bringing sweeping changes to an outdated and overburdened bankruptcy system, setting deadlines for the first time for processing insolvency cases.
At present, Asia’s third-largest economy has competing laws with unclear jurisdictions to deal with the liquidation or revival of companies.
This often results in the process dragging on for years, inflating costs for investors and taxpayers.
The bill, introduced by Finance Minister Arun Jaitley in the lower house, seeks to enact a single bankruptcy code.
Under current rules, even deciding whether to save or liquidate an ailing company can take years, leaving it in the hands of managers who can – and do – strip assets with impunity.
Foreign and domestic investors say the difficulty in exiting ventures is a deterrent in their investment decisions.
Arun Jaitley over the weekend told business leaders that the government was planning to pass the bankruptcy bill in the current parliament session that concludes on Wednesday.