The Supreme Court had upheld the constitutional validity of these amendments. Srinivas also said the government is planning to create a marketplace for stressed assets to maximise their value realisation and get the best people to run such units.
He said the ministry will soon commence the first phase of personal insolvency, which will deal with personal guarantors to a debtor. The overall personal insolvency code will, however, become fully operational in a year’s time. The government is fine-tuning the draft rules for individual insolvency and is likely to introduce three categories of debt resolution based on the loan amount.
The entry-level debt of up to Rs 35,000 will not have to go through any adjudication process, with the MCA planning to put an online mechanism under fresh start for resolving such loans. The ministry is considering two more slabs — Rs 35,000 to Rs 10 lakh and above Rs 10 lakh — which will have the option of both compulsory and voluntary mediation, failing which the matter will be referred to the Debt Recovery Tribunal.
The MCA is also planning to bring the cross-border insolvency Bill in the upcoming winter session of Parliament. The issue of group insolvency is still being studied for international best practices and its framework is yet to be finalised, said Srinivas.
The MCA secretary said the three-year-old IBC has been the deepest economic reform undertaken in the country. He said the earlier laws for resolution of stressed assets had led to less than 20 per cent recovery. The IBC has undergone three amendments so far, two through ordinances. The last set of changes introduced a 330-day deadline for completion of the resolution process, including litigation.
According to the MCA, the average time for resolution has been 315 days minus litigation under the IBC. “All changes have withstood judicial scrutiny. We have done mid-course correction whenever required,” said the MCA secretary. Srinivas also said the size and rate of growth of non-performing assets have come down after the introduction of the IBC.
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