NEW DELHI: Wilful defaulters and promoters will not be allowed now to participate in bidding to buy stressed assets of companies undergoing insolvency proceedings as the Lok Sabha on Friday passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2017.
Union Finance minister Arun Jaitley said the government cannot allow loan defaulters to “merrily walk back” by paying a fraction of the due amount.
The new amendments are part of an ordinance that was brought in last month. The Bill prohibits certain persons from submitting a resolution plan in case of defaults. They include willful defaulters, promoters or management of the company if it has an outstanding non-performing debt for over a year, and disqualified directors, among others. Further, the Bill bars the sale of property of a defaulter to such persons during liquidation.
These persons, however, can become eligible to submit a resolution plan if they clear all the overdue amounts with interest and other charges relating to their NPA accounts.
During the debate in the Lok Sabha, Jaitley took a jibe at Congress member Gaurav Gogoi, saying NPA was a legacy problem and was mainly on account of the reckless lending undertaken by the banks during the previous UPA dispensation. Gogoi had earlier cited World Bank data to claim that NPAs were low during the UPA rule. Jaitley said, “I am sorry that Gogoi has still not take cognisance of what the problem is. How did this problem of NPAs happen in such a big magnitude?