Skip to main content

Crucial year ahead for regulator

Crucial year ahead for regulator
It has been a hectic first year for the insolvency regulator, which hit the ground running.A year ago, when MS Sahoo went to work inasmall room in the building of the Institute of Cost Accountants of India, there were not many to assist him. The board itself comprised only nominee members.The first whole time member would join only five months later.But, Sahoo had tight deadlines.
The government wanted the entire corporate insolvency framework to be ready by December 1.Sahoo recalls how active participation from stakeholders helped him beat that tight 60day deadline.“This becameareform by the stakeholders, of the stakeholders and for the stakeholders,” he said in an interview.
Today, the board is better placed than in those early days.It has already moved to a more spacious office in the Connaught Place area.
Three whole time members have joined —Suman Saxena, who looks after research and regulation, Navrang Saini (registration and monitoring) and Mukulita Vijayawargiya (administrative law). Two parttime members are in the process of being appointed.
The board has six officers, and might need more.It has put in place the framework and has seen the market taking rapid strides, but the journey has only begun.The second year is likely to throw new challenges in the form of regulating, with hundreds of resolution plans reaching the completion stage and coming up for scrutiny.
Among these would be the big dozen cases, with over Rs 2 lakh crore riding on them.These highvalue transactions pushed through by the Reserve Bank of India have helped give the much needed visibility and impetus to the young framework.
Yet, banks or financial creditors still account for less than half of all cases.
A large number of cases continue to be filed by operational creditors such as customers and suppliers, while debtors themselves account for the rest.VG Kannan, chief executive, Indian Banks Association, said banks are overcoming initial teething troubles and warming up to the code.
“Banks are welcoming it.The borrower will be more careful.Earlier, they were content with being technically alive.
Now, with the Code, there is a possibility that they could be technically dead, too.” He added though the State Bank of India (SBI) is leading with the largest number of cases, even smaller banks have been moving National Company Law Tribunals.
“If you look at the list, you will see several smaller names.Just as they have been lending, they will take up with this process, too.” He feels the experience of dealing with the Debt Recovery Tribunal (DRT) has prepared banks to some extent.
“This process is slightly different.But, with the rigid timelines, it´sabit more positive for the banks.” Lawyers agree the first year has been good.Sumant Batra, managing partner at Kesar DassB &Associates, said, “The experience of the first few months of implementation has reinforced the popular belief that IBC is largely a sound piece of legislation.
There hasn´t been any major disruption so far but that does not mean the path ahead is free of challenges.” The Code has faced complex legal challenges already, which throw the timelines into disarray.
Other challenges include getting the multiple lenders to get together and agree.Batra said, “The real test of IBC lies in the journey of the 12 big cases undergoing resolution.
They are already experiencing complex problems —one committee of creditors without a cap on numbers makes conducting meetings impossible, interim finance providers are not coming forward as the law restricts payment of interest after a liquidation order is passed, and there are uncertainties over approvals required for implementing plans sanctioned by NCLT.” Absence ofasufficient number of qualified and experienced insolvency professionals is another issue.
These need to be addressed on priority as failure of resolution of the big cases due to deficiency in law could cause disruption, feel stakeholders.Kannan added court decisions in cases such as Jaypee Infratech, where home buyers have staked claim, will be keenly watched.
The Business Standard, New Delhi, 03rd October 2017

Comments

Popular posts from this blog

Deposit gush:-CA Institute Bats for Special Audit

Obligation for the Month of May 2017

Obligation for the Month of May 2017 Event DateActApplicable FormObligation6-May-2017Service TaxChallan No.GAR-7E-Payment of Service Tax for April by Cos7-May-2017Income TaxForm No.27C (TCS)Submission of Forms received in Apr  to IT Commissioner7-May-2017Income TaxChallan No.ITNS-281Payment of TDS/TCS deducted/collected in Apr10-May-2017ExciseER-1Return for Non SSI assessees for Apr10-May-2017ExciseER-2Return for EOUs for Apr10-May-2017ExciseER-6Return by units paying duty >  1 crore (CENVAT + PLA) for Apr12-May-2017D-VATBE - 2Advance information for 2nd fortnight of May of functions with booking cost > Rs 1 lakh in Banquet Halls,hotels etc. in Delhi15-May-2017D-VATDVAT-20Deposit of DVAT TDS for  Apr15-May-2017Income TaxForm 27EQTCS Returns by ALL Collectors15-May-2017Providend FundElectronic Challan cum Return (ECR)E-Payment of PF for Apr15-May-2017D-VATDVAT-48 Return of DVAT TDS for quarter ending March21-May-2017ESIESI ChallanPayment of ESI of Apr21-May-2017M-VATMVAT ChallanPa…

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …