New bankruptcy law cleared by parliament committee
Finance Minister Arun Jaitley on Wednesday said that the Joint Parliament Standing Committee has cleared the Bankruptcy and Insolvency Code and it is likely to be discussed in the current Budget session of Parliament. Addressing the second meeting of the Consultative Committee on NPAs (non-performing assets), Jaitley said that the government is taking various steps, including introduction of the Bankruptcy law in the Lok Sabha, to deal with the problem of mounting bad loans.
The Bankruptcy Law has been cleared by the Joint Parliament Standing Committee and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act and Debt Recovery Tribunal (DRT) Act have been amended to make the recovery process more efficient and expedient, he said in his opening remark. The finance minister said that wherever it was observed that number of cases in which action taken by the banks against guarantors for recovery of defaulted loans is insufficient, the government has advised the banks to take action against guarantors in the event of default by borrowers under relevant Sections of SARFAESI Act, Indian Contract Act and Recovery of Debts Due to Banks and Financial Institutions Act.
He further said that a direction to this effect has been issued to banks last month.The government, Jaitley said, has taken various measures to deal with the issue of NPAs in the banking sector especially in case of public sector banks (PSBs). Citing that there are two categories of defaulters, namely those who are unable to pay back due to economic slowdown both in domestic and global markets and other reasons outside their control as well as wilful defaulters, including loans sanctioned without due diligence by the banks, he said various measures are being taken to deal with both categories of defaulters.
In order to deal with default due to economic slowdown, the government has taken various measures to revive the stressed sectors which mainly include steel, textiles, power and roads among others, he said.Government has also done recapitalisation of banks by providing Rs 25,000 crore in Union Budget 2015-16 as well as in this year's Budget 2016-17, he said.