The government has formed a 14-member committee to review and improve the implementation of the insolvency and bankruptcy code (IBC).
As India’s bad loans have soared to 9.5 lakh crore, the government seems to be committed to tackling stressed assets. The government has formed a 14-member committee to review and improve the implementation of the insolvency and bankruptcy code (IBC), which have admitted nearly 300 cases in the last one year.
The committee will be led the secretary at the ministry of corporate affairs and will also have the Chairman of the Insolvency & Bankruptcy Board of India, representatives from the Reserve Bank of India, and other experts. The committee will look into the issues that are slowing down the implementation of the IBC.
Meanwhile, to ensure the success of the bankruptcy process, the Finance Ministry has asked banks to be vigilant to ensure that wilful defaulters are prevented from buying stressed assets again, official sources told PTI. It has been brought to the notice of the Finance Ministry that some wilful defaulters were making a bid to buy the assets of those cases which have been referred under IBC, a senior official said.
The resolution is crucial to the entire banking sector and therefore banks have been advised to be vigilant so that wilful defaulters do not get benefits of the process, the official said, adding banks have to be very conscious of the fact that such defaulters do not get into the system again.
The government last month approved massive Rs 2.11 lakh crore bank recapitalisation plan. Of the 2.11 lakh crore, 1.35 lakh crore would come from recapitalisation bond. Recap Bonds are used as payment for the shares bought by the government to ailing banks in a bid to raise their capitals.
The Reserve Bank of India has named 12 companies that account for 25% of the gross NPAs, and were identified for immediate bankruptcy proceedings, while there are 488 others which have been given six months time to restructure their debt or be dragged to National Company Law Tribunal (NCLT).
In India, power, steel, road infrastructure and textiles sectors are the biggest loan defaulters of state-owned banks. The Securities and Exchange Board of India in August had mandated companies to disclose details of loans on which they missed payments, but rolled it back “until further notice” on September 29. The reason for the decision is not clear yet.