The IBC magic wand: Fearing govt action 2100 companies clear dues worth Rs 83000 crores, reports

Fearing action from the government under the newly enacted Insolvency and Bankruptcy Code (IBC) for failing to repay their dues, 2100 companies have cleared dues worth Rs. 83000 crores, Times of India has reported. The majority of these dues have been cleared after the amendment of the IBC, however, it’s only a temporary relief as NPAs exceed Rs 7.31 lakh crores.

“The real success is the pressure on loan defaulters to clear dues. The borrowing and lending culture is changing because of IBC,” the report mentions an unnamed source as saying. The IBC will boost Arun Jaitley’s legacy as the Finance Minister of India who helped reform the debt-ridden Indian Banking system. Bankruptcy Board chief MS Sahoo told news agency PTI, “We have seen several instances where the corporate debtors have paid the default amount after trigger application is filed before the adjudicating authority but before its admission. Some of them pay up as soon as they receive a notice from an operational creditor.”

The Ordinance that sought to amend the IBC, which was approved by President Kovind last year, was introduced with the objective of preventing willful defaulters from bidding for stressed assets. The idea behind the Ordinance was to “put in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the Code”. The move was praised even by Narendra Modi’s usual detractors, such as Stanley Pignal at the Economist, who said, “In the business section we focus on the bankruptcy code. It used to be Indian tycoons could borrow as much as they wanted & default with no fear of losing “their” companies. No more. The impact is potentially far-reaching. Early days but encouraging stuff.”

- Advertisement - - Article resumes -

R Jagannathan, Editorial Director at Swarajya, wrote in praise of the government’s move following Tata Steel’s bid for Bhushan Steel, “A combination of good assets and bad balance sheets, which sent these companies to bankruptcy, has been rescued by a small turn in the commodity cycle and excellent performance by the bankruptcy courts, which have refused to delay settlements despite efforts to do so. This suggests that the system is turning a deaf ear to crony capitalists who usually get away with murder by using systemic delays. This is a qualitative change in the fight against crony capitalism.” Signs that IBC was starting to bear fruit became obvious when Tata Steel formally acquired control of Bhushan Steel at about Rs. 35,200 crores, which is nearly two-thirds of the money owed to lenders. And although the Banks have taken more than a 37% haircut, they can now classify the assets as standard, reducing their bad-loan burden. Furthermore, the Modi government is confident that it will be able to recover more than 1 lakh crore via the IBC.

Average in every department

Share and Support:
Support OpIndia by paying for content

Most read articles recently

Ghaziabad: Stray dog, mother of five puppies, raped and dragged to death by Nafees and Tauseef

Nafees, one of the accused, has reportedly confessed to the crime of raping the animal several times before dragging her through the streets

Here is what connects attack on Akshaya Patra, French NGO against Rafale and demonization of Amarnath Yatra

The web of foreign-funded NGOs that demonised the Amarnath Yatra, French NGO that complained against Rafale in France and the demand to remove Akshaya Patra from midday meals contract

Activist opposing Akshaya Patra’s mid-day meal contract thinks ‘Brahmins obstruct India’s development’

The Akshaya Patra has come under criticism recently for not including onion and garlic in its mid-day meals for school children.

Rajasthan Police ends up declaring a true incident as ‘fake news’ on Twitter

In a video being widely shared, a person can be heard complaining about 'Aurangzeb Rule' in Rajasthan and the people sharing the video claim it is from Utambar, Rajasthan.

All you need to know about Congress’ Chhattisgarh CM elect: Bhupesh Baghel, who was once jailed in sex CD case

Congress leader and Chhattisgarh CM elect Bhupesh Baghel is currently out on bail in sleaze video case

Loans waived by Congress govt in MP, but here are the ‘conditions apply’ that farmers should see

One of the main poll promises in the run-up to 2018 elections was farmer loan waiver. Rahul Gandhi and all Congress leaders harped on farmer loan waiver.

Zee News issues defamation notice of Rs 1000 crore to Congress leader Navjot Singh Singh

Sidhu had allegedly threatened the Zee News when he had said “nani yaad dila denge” after Zee News had shown a video ‘Pakistan Zindabad’ slogans were raised at an election rally

#GoBackSonia trends on Twitter ahead of Sonia Gandhi’s Tamil Nadu visit to inaugurate Karunanidhi’s statue

Twitter is abuzz with #GoBackSonia trend as Sonia Gandhi is going to Chennai to inaugurate the statute of DMK founder Karunanidhi.

Pakistan uses Congress leader and ‘liberal’s’ arguments to undermine PM Modi yet again

Aiyar, who is known to make controversial statements, spoke about the 'Rafale scam' and how it has dented Prime Minister Modi's clean image in India. He also claimed there was rampant corruption within the NDA government.

Debt ridden farmers receive recovery notices in Karnataka even as Rahul Gandhi claims state had waived farmer loans

The Congress party's promise of loan waiver in Karnataka seems to be a hoax as farmers are being constantly harassed with notices to repay the loans.

Latest articles

Connect with us

125,770FansLike
98,186FollowersFollow
6,355SubscribersSubscribe

Don't miss these