NEW DELHI: In the backdrop of recent financial crisis of non-banking finance companies (NBFCs) like Dewan Housing Finance Corporation Ltd (DHFL) and Indiabulls, the government is considering a provision for special window for resolution of stressed NBFCs under the Insolvency and Bankruptcy Code (IBC).
According to an official, the idea was discussed during the meeting of the Financial Stability and Development Council (FSDC) on Thursday, where Finance Minister Nirmala Sitharaman reviewed the state of the economy, stress in the financial sector and situation of NBFCs and rating agencies. Currently, resolution of stressed financial institutions cannot take place under the IBC. However, with the recent trouble at Infrastructure Leasing & Financial Services (IL&FS), DHFL and Indiabulls, which has spilled over to other sectors, the government is discussing this option.
The official said another reason for examining this option is to have some resolution mechanism for financial service provide as the government is considering to reintroduce the Financial Resolution and Deposit Insurance (FRDI) Bill.
This will require more discussions with the PMO, before the government sends it to the Cabinet for clearance, said the official adding, “Once approved, the aim is to finalise it ahead of the winter session.”
“Broadly overall macro-economic issues and the state of the economy were discussed in details. There were some inter-regulatory issues which were also discussed. We also discussed about cybersecurity issues that were one important component of the discussion,” Reserve Bank of India (RBI) Governor Shaktikanta Das told reporters after the meeting.