Coming strongly in defense of Ordinance amending the Insolvency and Bankruptcy Code, Finance Minister Arun Jaitley on Tuesday said that a strong and transparent system needs to be put in place so that the willful defaulters are not allowed to participate in the functioning of such companies and a time-bound recovery can be made from them.
Coming strongly in defense of Ordinance amending the Insolvency and Bankruptcy Code, Finance Minister Arun Jaitley on Tuesday said that a strong and transparent system needs to be put in place so that the willful defaulters are not allowed to participate in the functioning of such companies and a time-bound recovery can be made from them. Arun Jaitley, in a blog-post titled “The Fiction of Loan Waiver to Capitalists,” wrote that time has come to respond to the rumours being propagated that loans of capitalists are being waved off by this government.
He further stated, “Between the years 2008 to 2014, Public Sector Banks disbursed disproportionate sums of loans to several industries. The public needs to ask the rumour mongers at whose behest or under whose pressure were such loans disbursed. They should also be asked that when these debtors delayed in repayment of their loans and interest thereon to Public Sector Banks, what decision was taken by the then Government.”
“During the period of aggressive lending from 2008 to 2014, the gross advances of Public Sector Banks increased from about Rs. 34,00,000 crore. Despite repayment not being regular on these, through relaxation in loan classification, banks continued to keep defaulters as non-NPA account holders by restructuring them. Through this, the losses of banks and their precarious position was kept under the carpet,” he added.
Arun Jaitley also said that the government has not waived any loans of big NPA defaulters. Instead under the new Insolvency and Bankruptcy Code, cases have been instituted in the National Company Law Tribunal (NCLT) for time-bound recovery from 12 largest defaulters in six to nine months, in NPA cases of Rs 1,75,000 crore.
Finance Minister also expressed that in the past, adequate provision was not made for expected losses from stressed loans under the relaxation available for restructured loans. Public Sector Banks initiated clean-up and NPA recognition, and made up-front provision for expected loss.
President Ram Nath Kovind gave his assent to the Ordinance amending the Insolvency and Bankruptcy Code (IBC) on November 23, barring errant promoters of defaulting companies from regaining control of their assets being sold under the bankruptcy process, a day after being cleared by the Union Cabinet.