• Mizoram

    BJP 0
    Cong 0
    MNF 0
    OTH 0
  • Rajasthan

    Cong 19
    BJP 10
    RLM 0
    OTH 0
  • Madhya Pradesh

    BJP 5
    Cong 6
    BSP 0
    OTH 0
  • Chhattisgarh

    BJP 2
    Cong 2
    JCC 0
    OTH 0
  • Telangana

    TRS-AIMIM 4
    TDP-Cong 2
    BJP 0
    OTH 0

* Total Tally Reflects Leads + Wins

Arun Jaitley’s big message to defaulters: ‘IBC instilling fear’

By: | Published: October 28, 2018 4:01 AM

Analysts said the Insolvency and Bankruptcy Code has performed much better than the earlier system where the recovery process was strenuous and yielded too little.

Union Finance minister Arun Jaitley (File photo: PTI)

Potential loan defaulters have started paying up as the Insolvency and Bankruptcy Code (IBC) has instilled the fear of losing their businesses if they cross the red line, finance minister Arun Jaitley said on Saturday. “Banks won’t chase you (loan defaulters) any more; you will have to chase banks,” Jaitley said at the three-year-old IDFC Bank’s anniversary in the capital.

To a question why the government did not create much awareness among businesses about the IBC legislation, Jaitley said that was because vested interests would have engineered opposition to the new law. Lauding the amendment in the IBC law to include Section 29A, he said the provision effectively barred willful defaulters of regaining control of their businesses. “Potential defaulters are begging, borrowing and stealing, and paying back. That’s why banks have started getting money even outside the National Company Law Tribunal (NCLT) system,” he added.

Separately, Jaitley said regulators should have to take into consideration the feedback of stakeholders on important policy decisions. “May you survive your regulations,” Jaitley quipped when IDFC Bank CEO Rajiv Lall posed a question to the minister. Jaitley did not elaborate though.

Creditors have recovered Rs 49,783 crore, or almost 56% of their admitted claims, from 32 stressed companies where insolvency resolution plans were approved by the NCLT by the end of June, showed data compiled by the insolvency regulator. Despite the average 44% haircut that the creditors in general had to take in these cases, analysts said the Insolvency and Bankruptcy Code (IBC) has performed much better than the earlier system where the recovery process was strenuous and yielded too little.

Indeed, after decades of promoters having had the upper hand and arm-twisted lenders, bankers are in a more commanding position. The latest case involving Essar Steel is an example of that trend.

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