Insolvency & Bankruptcy Code - the Biggest Reform In Banking

Abstract

The advent of Insolvency legislation, “Insolvency and Bankruptcy Code,2016â€, is indeed a big shot in the arm for banking industry. Speed is essence of this Code. All this exercise under new Code is to maximization of value of assets in a time bound manner to promote entrepreneurship and availability of credit, to balance the interests of all the stake holders. There is a clear behavioural change of the Corporate Debtors who paid up the defaulted amounts to the Banks to avoid resolution proceedings thanks to Insolvency Code. As on 30.9.2018, as per the study by reputed rating agency ICRA, 52 Resolution Plans had been approved by the NCLTs and the Financial Creditors/Banks had received Rs.58,400 crores. In respect of applications filed by financial creditors before the NCLT under IBC,2016, applications were withdrawn before admission of 12 loan accounts in which banks have recovered an amount of Rs 449.76 crore till September 2018. Now, clearly there is hope for Banks to resolve NPAs quickly.