SME Times News Bureau | 26 Mar, 2019
Injeti Srinivas, Secretary, Ministry of Corporate Affairs said recently that
majority of corporate insolvency cases have been settled.
“The speed at which the cases have been disposed by the NCLT has been
commendable. But the IBC should be invoked only as a last resort.” He added.
Elaborating further on the subject, he informed that a majority of corporate
insolvency, which has led to burgeoning of NPAs, has been settled and the
accent is now on resolving personal insolvency.
In this context, an analysis of the outstanding non-food credit shows that
the industry tops the list followed by services sector, housing finance and
vehicle loans.
On dealing with personal insolvency, Srinivas elucidated on two routes
namely the insolvency resolution process followed by bankruptcy and secondly
making a fresh start. Stressing on the need for a planned approach, a fresh
start or a waiver of a loan should be considered for debtors based on a certain
criteria such as income levels, assets, possession of dwelling unit etc.
Fresh start or loan waiver is especially recommended as a large number of
debtors have small outstanding loans. The UK example for personal insolvency
should be emulated, a counsellor should be available to address the concerns
and the process should be made online.
On cross - border insolvency, Mr Srinivas stated that this is a new and
complex area which relates to resolving insolvency of companies which have a
global footprint and have assets spread across the globe.
Elaborating on the different processes available to enforce the judicial
order on insolvency, he said that the UNCITRAL model law on cross –border
insolvency gives a possible framework for addressing the issue of addressing
cross border insolvency and is slated to be approved by the Parliament shortly.
But this is still work in progress and more is required to tie up the loose
ends.