Centre willing for changes in Insolvency and Bankruptcy Code
New Delhi: Union Ministry for Corporate Affairs Secretary Injeti Srinivas on Friday said the government is ready to further amend the Insolvency and Bankruptcy Code (IBC), a game changer in creating a market for stressed assets.
"It is a game changer. The future contours of the Indian economy will be positively influenced by this. The government is more than willing to take any good suggestion, evaluate it and bring further changes in the IBC, if required," Srinivas said at an event here.
Srinivas, speaking at the Insolvency and Bankruptcy Reforms Conference, said the law has achieved much in less than two years since it was enacted. Earlier, the rules were focused on recovery instead of resolution, thereby losing much economic value in the stressed assets.
The code has already undergone four amendments. It clearly shows that the government means business and was working towards redefining the rules of the game, Srinivas said.
India has made a significant progress in terms of the four parameters of the World Bank's insolvency resolution framework -- time taken for resolution, insolvency cost, outcome and recovery.
"On all these parameters, we have within two years jumped more than 30 ranks. On the insolvency resolution framework, we were ranked 136; now we have come to 103,"
the officer said.
He said India will rise further in the World Bank rankings in the next year's evaluation when the IBC amendments were operationalised.
Srinivas said it was not true that the Insolvency and Bankruptcy Board of India (IBBI), which executes the IBC, prevents the promoter(s) from bidding for the stressed assets.
"This is a myth. Section 29 (A) will show you... we prevent an undesirable resolution applicant, including a promoter. We have not prevented the promoter alone," he said.
The officer denied that there was no competition in bidding for stressed assets.
"People are bidding and re-bidding. In fact, in the steel sector, land itself is a big attraction and therefore there is a lot of competition."
As per the last amendment, IBBI as a regulator has been given a specific development role that it should build the market for stressed assets.
The two-day conference, which began on Friday to deliberate on the accumulated empirical evidence of last two years for possible policy inputs, was organised by IBBI and the Indira Gandhi Institute of Development Research.