India’s bankruptcy bill in a nutshell
Local Press Co 5-point Snippet
1. On Thursday, Lok Sabha passed the Bankruptcy Bill which will allow banks to shut down ailing companies and recover the maximum possible amount by quickly selling off the company’s assets.
2. Drafted with recommendations from an expert panel headed by former law secretary T K Vishwanathan, the bill will now have to pass through Rajya Sabha before it can become law.
3. Once in becomes a law, it will allow banks to take a majority of decisions pertaining to the business in question, thereby improving the liquidity of the creditors. The banking sector has been lobbying for a bill to streamline the bankruptcy process for years.
4. The magnitude of the bill’s importance becomes even more evident from the fact that Indian banks are currently sitting on a pile of Non-Performing Assets (NPAs) and restructured loans amounting to almost Rs 8 lakh crore.
5. Although the bill is expected to fasten the recovery process, there are concerns over how the existing backlog of around 70,000 cases will be cleared, since it takes around 4 years to wind up a company in India.