Bankers suggest measures for fast resolution of insolvency cases

In survey, the bankers said the time norms for admission, appointment of valuer and forensic auditors, as well as for the resolution of the company must be strictly followed.

The bankers want speedy resolution of cases under the Insolvency and Bankruptcy Code (IBC). To this, they have suggested, among other things, the introduction of a mechanism to cut down unwanted litigation and ensure strict adherence to the timelines under the insolvency law.
 
A survey of bankers was carried out by FICCI in association with IBA in the July-December 2018 period.
 
Those surveyed said provisions similar to DRT (Debt Recovery Tribunal) must be introduced and a percentage of the loan outstanding must be mentioned while filing an appeal.
 
In survey, the bankers said the time norms for admission, appointment of valuer and forensic auditors, as well as for the resolution of the company must be strictly followed.
 
The bankers believe there is a need to strengthen National Company Law Tribunal (NCLT), by increasing staff and establishing more NCLT benches across the States.
 
At present, NCLT has benches in 11 locations across the country.
 
Though they seemed positive experience in recoveries since the implementation of IBC, they were of the opinion that the resolution process is being delayed owing to limited infrastructure in NCLT and rising cases of frivolous appeals.
 
To improve the efficiency of the resolution process, the government should come out with guidelines for NCLT to take up petitions, the survey said.
 
In June 2017, the RBI had identified 12 companies with overdue above Rs 5,000 crore each for immediate bankruptcy proceedings. Their total NPA was Rs 1,75,000 crore.
 
Till date, only three of the 12 big default cases namely Bhushan Steel Ltd, Monnet Ispat and Energy Ltd and Electrosteel Steels Ltd have been resolved under the new bankruptcy rules of IBC.
 
Source: Businessline

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