Injeti Srinivas, Secretary, Ministry of Corporate Affairs has stated that the Insolvency and Bankruptcy Code, 2016 (Code) is a very deep economic reform initiated in the recent years in the country and yet there is no parallel to the swift enactment and implementation of the law. Tracing the path of economic reforms in the country, he stated that some businessmen earlier had ‘vested interests’ in failing businesses, and as a result, there was no competitive spirit among the entrepreneurs.
The Code has introduced competition for entrepreneurship and capital. It encourages entrepreneurs to compete with one another to utilise the resources locked up in inefficient or defunct firms. Srinivas further stated that about 4000 applications for initiation of corporate insolvency resolution process were withdrawn before their admission indicating early settlement of default by corporate debtors.
The addition to NPAs and overall level of NPAs in the banking system has started declining, he added. The Code has brought discipline in the economic system and has proved to be the most successful law after independence. He commended the performance of NCLT in disposal of matters, both in terms of quality and quantity. While appreciating the performance of insolvency professionals, Srinivas hoped that the Graduate Insolvency Programme (GIP) conceived by the IBBI and to be delivered by the Indian Institute of Corporate Affairs would bring more efficiency in to the system.
Source: Business Standards, March 6, 2019