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Mint
3 days ago
- Business
- Mint
Parliamentary panel to recommend fresh set of changes to insolvency code
New Delhi: India's insolvency regime is set for further reform as the Parliamentary Standing Committee on Finance will likely recommend a set of measures aimed at speeding up decisions and boosting creditor recoveries under the Insolvency and Bankruptcy Code (IBC), two people familiar with the matter said. The suggestions will follow the committee's ongoing review of the Code. The review comes amid growing demands for speeding up debt resolution and improving recovery rates, and legal complexities exposed by the recent Supreme Court ruling in the Bhushan Power & Steel resolution case. Read this | House panel to scan IBC functioning after SC's Bhushan order The House panel, led by lawmaker Bhartruhari Mahtab, met last week with officials from the ministry of corporate affairs and the Insolvency and Bankruptcy Board of India (IBBI), along with executives of three state-run banks, to assess the performance of the Code since its rollout in 2016. In the meeting, officials told the panel that the IBC has become the principal recovery mechanism for banks and financial institutions, accounting for nearly half of all debt recoveries, and has also helped reduce borrowing costs for distressed companies, one of the persons quoted above said. However, the process continues to suffer from persistent delays and subpar recovery rates in many cases, often due to protracted litigation among stakeholders. So far, creditors have realised ₹3.89 trillion from approved debt resolution plans and ₹9,330 crore from liquidated companies, according to data from the IBBI. Another ₹1 trillion was realised from cases settled directly between creditors and companies. The committee is expected to meet more stakeholders, including insolvency professionals and industry representatives, before finalising its report, one of the people cited above said. Among the concerns raised in last week's meetings were the challenges faced by homebuyers in ongoing insolvency cases, the person added. Queries emailed on Monday to the ministry, the Parliamentary committee and IBBI seeking comments for the story remained unanswered at the time of publication. Experts say that resolving these bottlenecks will require strengthening the judicial infrastructure supporting IBC. 'To improve the IBC process, we need faster court decisions. This can be done by increasing the number of judges, reducing adjournments, and using better technology for case tracking. The process should stick to strict timelines to avoid long delays that reduce the value of assets," said Ritesh Kumar Adatiya, director, NPV Insolvency Professionals Pvt. Ltd. Court ruling questions IBC operations The Supreme Court last month rejected the five-year-old resolution plan for Bhushan Power & Steel Ltd (BPSL), citing jurisdictional issues and violations of IBC provisions. The ₹19,700 crore successful bid by JSW Steel Ltd was overturned, and the court ordered the liquidation of the company. It later granted JSW time to file a review petition. In a landmark ruling, the apex court held that bankruptcy tribunals do not have powers of judicial review over statutory authorities such as the Enforcement Directorate (ED). It also struck down an earlier National Company Law Appellate Tribunal (NCLAT) order that had insulated BPSL's assets from ED attachment, saying the tribunal had exceeded its jurisdiction. Read this | Mint Explainer: The Supreme Court's Bhushan Power ruling that has stunned India's insolvency ecosystem That decision, along with other recent Supreme Court rulings on the priority of statutory dues and the Competition Commission of India's (CCI) clearance requirements for certain resolution plans, has introduced new legal complexities not originally anticipated in the Code. The Ministry of Corporate Affairs is now working on a draft amendment bill to clarify some of these ambiguities and streamline the process. The bill is expected to be tabled in Parliament later this year. Despite the recent judicial setbacks, the Code has a strong foundation and remains robust in ensuring debt resolution, though some glitches persist in areas where the law remains unclear, said the second person cited earlier. NPV Insolvency Professionals' Adatiya added that outcomes under IBC can improve significantly if resolution plans are filed earlier and by credible applicants. 'Proper background checks, faster approvals, and fewer legal hurdles after plans are approved can go a long way in protecting lenders' interests," he said. Also read | A series of court orders changed bankruptcy rules. Now, the govt is amending the law 'IBC has helped change the credit culture in India," he added. 'But to improve outcomes, we need quicker resolution, stronger checks on resolution applicants, and better coordination between regulators, courts, and professionals. This will boost confidence and improve returns for creditors."
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Business Standard
29-05-2025
- Business
- Business Standard
Parliamentary panel flags 'ambiguities' in IBC; govt mulls amendments
A parliamentary committee on Thursday flagged 'ambiguities' in the Insolvency and Bankruptcy Code (IBC), with sources stating that the government appears to be in the process of considering amendments to address concerns, according to a report in Press Trust of India. Sources said the recent Supreme Court (SC) judgement rescinding JSW Steel's resolution plan for Bhushan Power and Steel Ltd (BPSL) was also brought up in the deliberations of the Standing Committee on Finance led by Bharatiya Janata Party (BJP) MP Bhartruhari Mahtab, an order which has led to a debate over the efficiency of the insolvency mechanism in place. On Monday, the apex court put a status quo on BPSL's liquidation based on a plea by JSW Steel, as the company argued that the liquidation would be damaging to it, its lenders, and its employees. Corporate affairs secretaries and representatives of multiple banks appeared before the committee on Thursday while its members discussed the agenda of the 'review of working of the Insolvency and Bankruptcy Code and Emerging Issues.' Sources said certain committee members flagged inadequacies, such as delays in the resolution process. It was noted that the preceding panel, headed by Jayant Sinha, had also highlighted certain gaps in the law and recommended changes. The government had accommodated some of the said suggestions in an initial amendment of the law. "We believe that the government is very much in the thick of things as far as addressing the issues related to the IBC are concerned. We got the view that there may be more amendments in the offing," a source said. The source added that the IBC has, on many occasions, served the company and its creditors in distress. "Any law is a dynamic process. It evolves with time," said the source, adding that the IBC, enacted in 2016, has proved helpful in various cases. What is the Insolvency and Bankruptcy Code? Enacted in 2016, the IBC lays down a basic framework for the insolvency and bankruptcy-related resolution of individuals, partnership firms, and corporate entities. The aim of this code is to revive businesses undergoing financial distress in a timely manner, aiding creditors to recover their dues. The central goal of the IBC is the streamlining of the insolvency process, protection of interests of stakeholders involved, and ultimately enriching the efficiency of the Indian economy as a whole.
Mint
20-05-2025
- Business
- Mint
House panel to scan IBC functioning after SC's Bhushan order
The parliament's top finance panel is set to scrutinize the country's insolvency and bankruptcy framework, in the wake of a recent Supreme Court order quashing the rescue of Bhushan Power & Steel Ltd (BPSL) and ordering its liquidation. Officials from the corporate affairs ministry, the Insolvency and Bankruptcy Board of India (IBBI) and public sector banks will brief the Parliamentary Standing Committee on Finance on the bankruptcy framework and its operational aspects as policymakers look for a way forward after the landmark Supreme Court judgement. The committee is led by Bharatiya Janata Party's Lok Sabha MP Bhartruhari Mahtab. BPSL was among the 12 large bad loan accounts identified early for priority resolution. In September 2019, a company law court approved JSW Steel Ltd's ₹19,700 crore BPSL rescue plan, which was also upheld by an appeals tribunal the next year. The Supreme Court on 2 May this year overturned the plan, citing non-compliance with the insolvency and bankruptcy code (IBC) provisions and certain jurisdictional issues. The order, which came five years after the final clearance, is seen as a milestone in India's debt resolution framework as it highlights the need to ensure the integrity of the debt resolution process. Also read: Behind PAN data, a quiet story of women's rise in India's economy Taking evidence After a briefing by the corporate affairs ministry on 29 May on 'the working of IBC and emerging issues', the panel will take oral evidence from representatives of three leading state-run banks, according to the panel's schedule made available by the Lok Sabha Secretariat. On 30 May, the panel will discuss the matter with the representatives of bankruptcy rule maker and regulator of professionals, IBBI. The working of IBC came under the spotlight after the SC said that following procedures and legal provisions—and not just the end result—was critical in debt resolution. The judgement also highlighted lapses by the resolution professional and the creditors of the distressed company. Roadmap for growth Apart from the working of IBC—an important policy tool for addressing industrial sickness—the House panel will also discuss the 'roadmap for Indian economic growth in light of global economic and geopolitical circumstances' with chief economic advisor (CEA) V. Anantha Nageswaran on 9 June, showed the schedule. This discussion is expected to cover the impact of reciprocal tariffs imposed by the US on India as well as the broader policy goal of making India a developed economy by 2045, a person aware of the development said. Also read: Asian factories bear scars of Trump's tariff blast JSW Steel declined to comment. Queries emailed to the ministry of corporate affairs, IBBI and to the CEA on Sunday seeking comments remained unanswered. The choice of topics suggests the House panel is focused on issues having a bearing on investments, jobs and economic growth. The panel's recommendations often influence policymaking and administrative decisions, although they are not binding on the government. The Supreme Court's order in the BPSL case is a wake-up call for all stakeholders that IBC, which is to facilitate resolution of corporate debtor in a just and equitable manner, must be followed in letter and spirit, said Ashok Haldia, former chairman of the governing board of Institute of Insolvency Professionals of ICAI (IIIPI), a body which enrols and regulates insolvency professionals. No excuse for non-compliance Haldia, who also chaired a committee of the Institute on improving real estate bankruptcy resolution, said that the mere fact that one has gone far ahead in the process of debt resolution cannot be an excuse for non-compliance with the law. 'Commercial wisdom of the committee of creditors (COC) cannot be stretched to exceed associated legal boundary. There is also a case for reviewing how the profession of insolvency professionals is structured, organized and equipped—not only to comply with legal and regulatory requirements but also to handle the complexities of resolving distressed businesses as going concerns," said Haldia. Key measures that could make IBC more efficient include inducting a scheme for group insolvency in IBC, allowing project-wise insolvency and extending the scheme of pre-pack insolvency now allowed for micro, small and medium enterprises, to larger companies, according to Siddharth Srivastava, partner, Khaitan & Co. Also read: Wholesale inflation eases to 13-month low of 0.85% in April as food, fuel prices soften 'While the concept of group insolvency has been recognized by adjudicating authorities starting with SBI v. Videocon Industries Ltd. and subsequently allowed in the insolvency resolution of Lavasa Corporation Ltd., Sachet Infrastructure Pvt. Ltd etc., it is, however, essential that statutory recognition may be given to the concept. In the absence of the same, many adjudicating authorities have not recognized the principle, leading to non-consolidation of assets and loss in value maximization of corporate debtors," said Srivastava. While the avenue for exploring project-wise insolvency has been allowed under regulations, there is no clarity in regard to the same, said Srivastava. 'It is also important to note that the Code only recognizes resolution of a company as a whole. The corporate insolvency resolution regulations cannot negate the principles of the Code, hence it is imperative that recognition and guidelines for initiating project wise insolvency may be introduced as provisions under the Code," said Srivastava. Following the apex court's rejection of JSW Steel's resolution plan, the National Company Law Tribunal (NCLT) principal bench in New Delhi last Tuesday considered representations from different parties including the central government's request to implead on the matter. NCLT is expected to hear the matter further on 30 May and issue directions regarding implementation of the Supreme Court decision, showed the NCLT order seen by Mint. One of the creditors told the tribunal that other options are under consideration including a fresh debt resolution process. 'The profession insolvency resolution professionals needs to restore in it the confidence of stakeholders. It is high time for revisiting IBC which amongst others addresses the legal, institutional and judicial reforms so that finality in resolution is arrived at within 360 days," said Haldia.
The Hindu
12-05-2025
- Business
- The Hindu
BCRC seeks remuneration review of Bank Mitras
Business Correspondent Resource Council (BCRC), the industry body representing Bank Mitras, has appealed to the Parliamentary Committee on Finance to review the remuneration of Bank Mitras and sought subsidy on their infrastructure cost. Recently office bearers of BCRC met Bhartruhari Mahtab, Chairperson, Parliamentary Committee on Finance and made a representation. Since Bank Mitras' remuneration is by way of commissions from banks, and the rates for which were set in 2014 and have not been revised since then, a review has been sought. 'The ATM interoperability charges have been recently revised to ₹19, on similar lines, commission structure for AePS (Aadhaar Enabled Payment System) which is used in rural banking, may also be revised,' the BCRC said in the submission. It has urged that a remuneration review committee comprising the Department of Financial Services, financial institutions, NPCI & industry bodies may be set up for a review. Considering Bank Mitras face significant expenses for essential technology upgrades like for laptops, passbook printers and biometric devices, the BCRC has asked the Commission to subsidise supporting infrastructure costs through RBI's Payments Infrastructure Development Fund (PIDF). 'The PIDF is designed to subsidise payment infrastructure in underserved areas, direct PIDF subsidies would be crucial to offset these costs,' it said. Towards systemic strengthening, it has urged for the need for clear accountability guidelines to delineate roles of banks & Bank Mitras in cases of fraud, 'so that genuine agents are not penalised for systemic failures.'
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Business Standard
04-05-2025
- Business
- Business Standard
Parliamentary panel seeks info on digital market competition from CCI, MCA
A Parliamentary panel has sought detailed information from regulator CCI and the Ministry of Corporate Affairs on various aspects of competition in relation to the digital markets, including those pertaining to the digital competition bill, according to sources. The Parliamentary Standing Committee on Finance, which is looking into the 'Evolving Role of Competition Commission of India in the Economy, particularly the Digital Landscape', had a meeting on April 28. Following the meeting, the panel, headed by headed by BJP leader Bhartruhari Mahtab, has sought more details on various aspects of competition in the digital markets, Competition Commission of India (CCI) and the actions taken by the watchdog. Among other topics, the sources said the committee has asked about whether the ongoing India-US bilateral trade negotiations has any bearing on the progress of the digital competition bill. It has also mooted ex-ante regulatory framework to prevent possible monopolistic practices in the digital markets. However, various entities, including the Internet and Mobile Association of India (IAMAI), have raised concerns about certain provisions of the bill. The ministry is examining comments received from the stakeholders. The panel has also asked about plans to have specialised people and sufficient staff at the CCI's digital markets division in order to effectively keep a tab on competition in the digital markets, as per the sources. Further, the sources said details about allocation of funds to the CCI as well as manpower strength and vacancies at the regulator have been sought by the panel. (Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
