The Centre will soon announce a slew of measures to bring more resources into the banking system, while also regulating domestic use of cash. To this end, the finance ministry is looking at bringing in a new bankruptcy code to increase recovery rate as well as detect black money, which down the line can help in higher capital inflow into the economy as well as enhance ease of doing business.
Finance minister Arun Jaitely said the government would soon take up the matter of bringing about changes in the bankruptcy code as well as bring about changes in the arbitration law to provide for fast track arbitration mechanism. “I am over the next few days, in regards to domestic use of cash and also to discourage use of cash, going to announce a new set of steps”, Jaitely said.
He said; “the bankruptcy code, the arbitration law needs to be changed and the Prevention of Corruption Act-1988, needs to be amended. These are all an integral part of the reform process, which the government has already taken. Prevention of the Corruption Act is pending as the first item in the Rajya Sabha for amendment. If the house can function the law can be passed.”
Jaitely told FE that the government was looking for a stronger bankruptcy law to protect the rights of the borrowers and lenders, promote predictably, get clarity on the risks associated with lending and make debt recovery more attractive with bankruptcy proceedings.
This can ensure high flow of capital in the economy facilitating more credit. A finance ministry official said debt recovery rate in India is 25% against more than 70% in OECD countries.