Former Finance Minister and Congress leader P Chidambaram and Finance Minister Arun Jaitley sparred over the Insolvency and Bankruptcy Code Amendment Bill in the Rajya Sabha on Tuesday, 2 January.
The Insolvency and Bankruptcy Code (Amendment) Ordinance, 2017 Bill was passed by the Lok Sabha last week.
Chidambaram, while initiating the debate on the Bill, supported it but pointed to various clauses, which, according to him, would deter Indian companies from participating in the process.
Earlier, the Opposition had asked the government to identify willful defaulters of bank loans.
I think one should have been a little more rigorous in the exclusion clauses. One should have kept exclusion to a very, very small number which definitely must be excluded. But I am afraid by making the clauses so broad, so over-inclusive, practically everybody in the financial world is likely to be excluded.P Chidambaram, Former Finance Minister
He said a major concern was lack of a bidder for a company as a 'going concern'.
Attacking the government for being non-serious on recovery of non-performing assets (NPAs) that are estimated to have touched Rs 10 lakh crore, D Raja (CPI) sought to know "why the government is afraid of corporate companies" and not publishing the names of defaulters.
Jairam Ramesh (Cong) raised concern about lenders taking "big haircuts" or discounts on claim value of NPAs and asked if this is going to be a "norm".
Responding to the concerns of the members, Jaitley said the whole effort was to make banking sector robust and detach it from politics.
You need a strong banking system ...You need banks which are able to lend money to large industries, to infrastructure projects, to small industry, for educational loans. ...It is all part of the economy that you need a robust banking system.Arun Jaitley, Finance Minister
Jaitley said during the insolvency process, banks and unsecured creditors will have to take some haircut and if the same management comes back, nothing would change.
The objective of the bill is to allow creditors to move to the National Company Law Tribunal (NCLT) in case of insolvency.
We have now started that resoltuion process ...There are several hundereds of them and almost more than 500 have been disposed of. Creditors are using these procedures.Arun Jaitley
He said large pending cases are broadly in two categories - one with large assets, functional plants and factories and the other are either trading companies or EPC companies with little assets.
Jaitley said as far as asset-owning companies are concerned, fetching the best prices is the target and any bid which is not viable can be rejected. It is for creditors to decide how much haircuts they want, he said.
Earlier, the Opposition had asked the government to identify willful defaulters of bank loans.
Jaitley the government has entered into an unchartered territory as far as bankruptcy and insolvency Code is concerned and would continue to modify the law dealing with the issue.
“Insolvency and bankruptcy is an area in which it is only in the recent years that we have chartered into. It is a learning experience,” the Minister said while winding up a debate on the Insolvency and Bankruptcy Code Amendment Bill, which was later approved by the Rajya Sabha through a voice vote.
What The Bill Seeks to Do
The bill seeks to replace an ordinance which was promulgated in November to prevent unscrupulous persons from misusing or vitiating the provisions of the Insolvency and Bankruptcy Code (IBC).
The ineligible persons or entities will include undischarged insolvent, wilful defaulter and those whose accounts have been classified as non-performing asset.
These persons, however, can become "eligible to submit a resolution plan" if they clear all the overdue amounts with interest and other charges relating to their NPA accounts.
Those defaulters who had participated in the insolvency proceedings before 23 November can also bid for stressed assets provided they clear their dues in a month.
Jaitley emphasised that the Centre's consistent position was that such currencies were not legal tender.
While a repeated message was being given that such currencies were not legal tender, more detailed steps would be taken once the report of the committee is submitted, he said.
He said there were 785 different types of cryptocurrencies operating worldwide.
Independent member Amar Singh wanted to know what action was being taken in regard to the names which have figured in the Panama papers and Paradise papers, even as trading in bitcoins was also going on.
Jaitley said that the government was acting as per the law in these matters.
Video Editor: Vishal Kumar
(With inputs from PTI)
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