Skip to main content

LS Passes IBC Second Amendment Bill 2018

By
The Lok Sabha on Tuesday passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2018 that recognises homebuyers as financial creditors to real estate developers. The bill also proposes a special dispensation for small sector enterprises. The IBC Amendment Bill now requires clearance from Rajya Sabba to replace the June 6 ordinance that sought to put these amendments into force to aid quick resolution of several bankrupt firms.
Moving the bill in Lok Sabha, interim finance minister Piyush Goyal said, “We want to address concerns expressed by the MSME sector and homebuyers. We have learnt from two years of implementation of IBC, and through the amendments, we want to strengthen IBC Bill.” The minister also said that the objective of the bill was not to liquidate the companies but to save jobs in those companies. “After years of lethargy in recovering bank loans, finally we now have a new law — the Insolvency and Bankruptcy Code 2016, which has started bringing big bank defaulters to the book and made banks recover loans from them,” the minister tweeted.
Goyal also rejected Opposition’s charge that the government has come out with an ordinance to amend the code to favour a big corporate house. The bill says that homebuyers will get due representation in the committee of creditors (CoC) that takes a call on resolution proposals, making them an integral part of the decisionmaking process. It also provides some reliefs for micro, small and medium enterprises (MSMEs). It does not disqualify promoter of an MSME firm from bidding for his enterprise undergoing corporate insolvency resolution process (CIRP), provided he is not a wilful defaulter and does not attract other disqualifications not related to default.
According to the bill, lenders will need to seek the prior approval of the competition regulator before finalising resolution plans. The measure seeks to prevent litigation that can derail the resolution process at a later stage. Currently, the winning bidder approaches Competition Commission of India (CCI) for clearance before formally taking over the asset. The amended code allows withdrawal of a resolution application with the approval of 90% members of the CoC. However, such withdrawal will only be permissible before publication of notice inviting expressions of interest (EoI). This means there can be no withdrawal once the commercial process of EoIs and bids starts.
The Economic Times, 1st August 2018, New Delhi

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more