NEW DELHI: The Centre plans to amend the Insolvency and Bankruptcy Code (IBC) to prevent promoters from delaying resolution process and to ensure its time-bound completion.
According to sources, a special presentation was given by the bankers to the Reserve Bank of India (RBI) and the Union finance ministry, which said that the delaying tactics of promoters are eroding the very spirit of IBC and this is stalling the resolution plan, citing the case of Jaypee Infrastructure.
"The IBC has some provisions which are being misused by the promoters, which in turn delay the whole process. The finance and corporate affairs minstries are in touch with experts and stakeholders to amend the law," a senior IBC official told The New Indian Express.
Under IBC, promoters are not allowed to bid for their own companies. However, they can delay the process by various means. "Bankers have pointed out the loopholes and have given a detailed representation to the finance ministry and even RBI. That is being examined," the official added.
The development follows the ruling in the case of Dewan Housing Finance Corporation (DHFL) case, where its promoter Kapil Wadhawan sprang a surprise with a Rs 91,000 crore after the Piramal group had made a Rs 34,250 crore offer. The unexpected move prompted the Mumbai bench of the NCLT to ask the committee of creditors to consider the offer last month, which was stayed by NCLAT.
Out of the total 4,300 cases admitted to bankruptcy courts since FY17, only 8 per cent have been resolved while 40 per cent are still pending. About 30 per cent have seen liquidation.
Starting from June, 2017, of the Rs 4.65 lakh crore worth debt which the RBI had shortlisted for IBC proceedings, banks have managed to recover 28 per cent, or Rs 1.3 lakh crore, over the past four years. As a share of the outstanding debt of the 20 accounts where resolution was achieved, the recovery stands at 40 per cent of outstanding debt.