Skip to main content

Debtors can´t be allowed to paralyse banking system, says Jaitley

By

Finance Minister Arun Jaitley on Thursday said public sector banks needed the Banking Regulations Ordinance in order to be able to take decisions without fear of being subjected to investigation later.
Replying to a debate on amendments to the Banking Regulations Act, Jaitley, who also holds the defence and corporate affairs portfolios, said the decision to take defaulters through the bankruptcy process was not a political one, and that such a move was necessary to start clearing the Rs 7 lakh crore toxic assets in the banking system.
The amendments were passed by Lok Sabha and the Bill will now move to the Upper House of Parliament.
The Insolvency and Bankruptcy Code (IBC) allows creditors to file insolvency cases against defaulters, which are given 180 days for restructuring.
The National Company Law Tribunal (NCLT) can offer a company an extension of 90 days but if are solution plan is not finalised by then, its assets will be liquidated.
All financial creditors will receive their shares first and then claims of operational creditors will be settled.
Jaitley said the reason why banks did not take their biggest defaulters through the insolvency process before the ordinance was issued was fear among bankers of being probed later under the Prevention of Corruption Act.
A Reserve Bank of India (RBI) oversight committee was keeping an eye on the recovery process, he added.
In the last few months, few banks have filed insolvency petitions.
Mostly, companies themselves have filed petitions to restructure themselves.
The other category of petitioners are operational creditors, like service providers, flat owners and employees, who would have otherwise not have had the chance to claim their dues from defaulting companies.
Till July 10, 112 such announcements have been made, of which banks account for 17 announcements.
State Bank of India (SBI) and Punjab National Bank (PNB) are applicants in three cases each, and Bank of India (BoI), IDBI Bank and ICICI Bank account for two cases each.
Edelweiss Asset Reconstruction has initiated three cases.
“Adebtor cannot paralyse the banking system by not paying up debts for years.
At the same time, we need to ensure these companies are saved as running companies mean jobs,” Jaitley said.
The Business Standard, New Delhi, 04th July 2017

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more

E tailers global warehouses may come under tax net

By
E tailers  global warehouses may come under tax net Warehouses of e-commerce companies based in countries such as Australia, Japan, Italy,  Spain, the Netherlands, and Russia may not be exempted from paying the income tax in India  once the multilateral instrument (MLI) to prevent base erosion and profit shifting (BEPS)  comes into force. BEPS refers to the reporting framework mooted by the Organisation for Economic  Co-operation and Development (OECD) and signed by over 100 countries, including India, to  prevent exploiting gaps and mismatches in tax rules to shift profits by multinational  companies (MNCs) artificially to low-tax regimes. The representatives of 68 countries on June 7 this year signed an agreement (MLI) in Paris  to amend their tax treaties to bring them in alignment with measures to prevent BEPS.  However, there is still time for synchronising tax treaties with the multilateral  instrument. India has submitte...
17 comments
Read more