Finance Minister Nirmala Sitharaman on Saturday urged insolvency regulator IBBI to be active, watchful as well as nimble-footed in tackling insolvency related issues of companies facing stress due to exogenous factors such as global supply chain disruptions, stating that the country cannot afford for Insolvency and Bankruptcy Code (IBC) to lose its sheen.
“We must be conscious that we can’t afford IBC to lose its sheen, especially when the Prime Minister is looking at the next 25 years of India (emerge as a developed country by 2047). We must do whatever it takes to keep IBC as sparkling as it was when it was introduced in 2016. This is a critical area for Indian economy”, Sitharaman said at IBBI’s sixth annual day celebrations event in the capital.
She also said that companies especially those in distress — due to global supply disruptions—should not be treated with indifference or delay. “We can’t afford to have liquidations to suffer or early distressed ones which are coming up go unnoticed. We need to be active on this”, Sitharaman said.
The Finance Minister’s remarks are significant as it comes at a time when there is a narrative in sections that IBC is also losing its shine because of glitches such as delays in admission at NCLT etc. “It is time for us to put in place systems on how to handle current and future challenges. We have to put our ear close to the ground to hear about vibration of global disruptions and see how we can keep our processes and systems efficient”, she said.
Sitharaman also called for steps to upskill the resolution professionals in the country so that they are able to handle complex cases. “Resolution professionals must be periodically brushed on skills”, she added.
She also highlighted that the pre pack insolvency regime introduced for MSMEs have not taken off and the regulator insolvency and bankruptcy board of India (IBBI) must look into the reasons.
On inflation, Sitharaman said that it is in “manageable level”. This remark came a day after the Reserve Bank of India raise its repo rate by 50 basis points on Friday. To tame inflation, RBI as since May this year cumulatively raised repo rate by 190 basis points in tranches.
She also said that government is actively engaged with several sovereign funds for investing in India and there is also lot of investor interest in India. “You are going to have lot of mergers and acquisitions”,Sitharaman said.
Earlier, Competition Commission Chairman Ashok Kumar Gupta highlighted that large scale entry of start-ups in the last six years is fuelling competition. He also expressed confidence that IBC will continue to play a critical role in giving young risk takers the comfort of rapid, simple and seamless resolution or exit in case of honest business failures.