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On January 2, Finance Minister Arun Jaitley said that the government has entered unchartered territory as far as the Bankruptcy And Insolvency Code is concerned and would continue to modify the law dealing with the issue. “Insolvency and bankruptcy is an area in which it is only in the recent years that we have chartered into. It is a learning experience”, the minister said on the Insolvency and Bankruptcy Code Amendment Bill, which was later approved by the Rajya Sabha through a voice vote. The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill was passed by the Lok Sabha recently. Jaitley said that the government has been confronting situations which were not anticipated earlier and assured the House that it would continue to take corrective action. The bill seeks to replace an ordinance which was announced in November, 2017 to prevent corrupt persons from misusing or vitiating the provisions of the Insolvency and Bankruptcy Code (IBC). The ineligible persons or entities will include undischarged insolvent, wilful defaulter and those whose accounts have been classified as non-performing asset.
However, these persons can become “eligible to submit a resolution plan” if they clear all the overdue amounts with interest and other charges relating to their NPA accounts. He said the whole effort was to make the banking sector robust and detach it from politics. “You need a strong banking system …You need banks which are able to lend money to large industries, to infrastrucute projects, to small industry, for educational loans. …It is all part of the economy that you need a robust banking system”, he said. The objective of the bill is to allow creditors to move to the National Company Law Tribunal (NCLT) in case of insolvency. “We have now started that resolution process …There are several hundreds of them and almost more than 500 have been disposed of. Creditors are using these procedures”, the Minister said. Large pending cases are broadly in two categories – one with large assets, functional plants and factories and the other are either trading companies or EPC companies with little assets, he said. As far as asset-owning companies are concerned, finding the best prices is the target and any bid which is not feasible can be rejected. Earlier, the Opposition had asked the government to identify wilful defaulters of bank loans. Former Finance Minister and Congress leader P Chidambaram, while initiating the debate on the bill supported it but highlighted various clauses which would deter Indian companies from participating in the process. “I think one should have been a little more rigorous in the exclusion clauses. One should have kept exclusion to a very, very small number which definitely must be excluded. But I am afraid by making the clauses so broad, so over-inclusive, practically everybody in the financial world is likely to be excluded”, Chidambaram said. Attacking the government for being non-serious on recovery of Non-Performing Assets (NPAs), that are estimated to have touched Rs 10 lakh crore, D Raja (CPI) sought to know “why the government is scared of corporate companies” and not publishing the names of defaulters.
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