Former Reserve Bank of India (RBI) governor Raghuram Rajan had also recently said that an out-of-court restructuring mechanism was needed and the National Company Law Tribunal (NCLT) should be involved only as a last-case scenario.
However, Jaitley said, various RBI schemes for settlements and restructuring did not bring much result.
There were a number of ways, besides the IBC, to restructure loans, such as corporate debt restructuring, sustainable structuring of stressed assets, joint lender forums, strategic debt restructuring, and flexible structuring of existing long-term project loans. The RBI scrapped all of it earlier this year, making the IBC the main tool to deal with defaulters.
The central bank has also said banks would have to cough up higher penalties and make higher provisioning on their books if it was found that they had violated the Code or were “evergreening” accounts.
On Tuesday, Jaitley also spoke of Section 29(A) of the IBC, which deals with related-party provisioning and aims to prevent defaulting promoters from taking back their companies.
“There are many contradictions that have been pointed in this,” he said.
Promoters of defaulting companies had also found it difficult to acquire insolvent companies. For instance, the case of ArcelorMittal, which wanted to acquire Essar Steel, had to pay off the dues of Uttam Galva and KSS Petron. Arcelor had a substantial stake in these companies but exited them in February this year.
“Brothers are considered to be related parties, but they need not be in terms of business,” said Jaitley. “They might be business opponents.”
Insolvency and Bankruptcy Board of India Chairman M S Sahoo, who also attended the event, said 300 cases have been resolved or liquidated since the IBC was rolled out.
Of these, 212 were sent for liquidation, 52 found resolution, and 118 were closed on appeal or review, according to the official data.
He also provided other sets of data: Of the 816 current cases in the IBC process, 180 days have not been completed in 420. In 158 cases, 180 days are over, but not 270. In 238 cases, 270 days are over.
Under the IBC process, a case has to be resolved within 180 days of the NCLT approving a plan of the committee of creditors (CoC). This could be extended by another 90 days.
Most insolvency cases have been in the engineering and construction sectors, followed by food, beverage and hospitality, iron and steel, textiles, metals and electrical, according to a research done by Vidhi Centre for Legal Policy.