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Insolvency and Bankruptcy code (IBC) will play a significant role in India realising its dream of evolving into a $ 10 trillion economy in foreseeable future, a top Government official has said.
“This law (IBC) has come to stay and enable Indian economy to greater heights by promoting entrepreneurship and ensuring effective use of capital”, Injeti Srinivas, Secretary, Ministry of Corporate Affairs said at CII organised conference on IBC here on Tuesday.
Frivolous bids
Srinivas also said that Government would soon take “effective steps” to discourage “frivolous bids” and make sure that the system is not gamed by resolution applicants. IL&FS GROUP
Later, Srinivas told reporters on the sidelines of the CII Conference that he expects the first phase of resolutions to happen in the next few months. Already 50 percent of the IL&FS Group assets have been put on the block, he added.
Asked if the latest NCLAT order (No NPA should be recognised by banks in the IL&FS matter) put the banks in a quandary as regards compliance with RBI norms, Srinivas felt NCLAT directive was one off and done in national interest.
He also said that the next round of insolvency regulations will be on ‘corporate guarantors’ and this will be followed up with regulations on individual insolvencies.
CII’s concerns
Subodh Bhargava, Past President, CII said that insolvency law is a game changer but non-adherence to timelines and inordinate delay in admission of cases are major concerns, especially where debt is well established and one does not have to determine the quantum of debt, rather one has to determine whether there is a default.
“When say,14 days time is given in the law, it should be done in 14 days. Whereas, it is seen that it is taking three months or more. This needs to be addressed”, Bhargava said.
He also suggested that definition of Persons Acting in Concert (PAC) be specifically included in the Bankruptcy ordinance and a reasonable definition be introduced for the purposes of submission of resolution plans.
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