At present, financial resolution regime consists of
1. lenders and borrowers dispute being solved by the insolvency professionals , in the recent insolvency and bakruptcy code 2016, any lender (say banks) feel that it would nt be able to reclaim money from the borrowers in a stipulated amount of time, the the lender can drag the borrowers in the debt recovery tribunals. The tribunals will solve the dispute via insolvency professional (if the borrower claims himself or herself to be insolvent).
2. This regime is an improvement over the older regime of company law board regime (if the borrower happens to be a firm under Companies Act 2013). Howver, there are still some lacunae. There is a provision of extension of due date for the case to be solved. This will further delay the process and litigation continues. It does not support ease of doing business.
Other reforms needed are
1. cluster based approach for financial resolution, MSME sector should be once cluster such that all disputes related to MSME can be solved in one particular tribunal, similarly cluster for farmers for manufacturing industry, for FMCG companies and so on
2. in case of banks, the equity of banks that wil go bankrupt, is not agood idea. Why should a person end up with equity of loss making bank
1. lenders and borrowers dispute being solved by the insolvency professionals , in the recent insolvency and bakruptcy code 2016, any lender (say banks) feel that it would nt be able to reclaim money from the borrowers in a stipulated amount of time, the the lender can drag the borrowers in the debt recovery tribunals. The tribunals will solve the dispute via insolvency professional (if the borrower claims himself or herself to be insolvent).
2. This regime is an improvement over the older regime of company law board regime (if the borrower happens to be a firm under Companies Act 2013). Howver, there are still some lacunae. There is a provision of extension of due date for the case to be solved. This will further delay the process and litigation continues. It does not support ease of doing business.
- There should be a provision of reduction in due date once the insolvency professional accepte the application.
- Time period should be successively reduced with each step moved forward.
- The lender should be awarded for having recliamed the amount from the borrower in less than stipulated time as provided in Insolvency and bankruptcy code 2016
Other reforms needed are
1. cluster based approach for financial resolution, MSME sector should be once cluster such that all disputes related to MSME can be solved in one particular tribunal, similarly cluster for farmers for manufacturing industry, for FMCG companies and so on
2. in case of banks, the equity of banks that wil go bankrupt, is not agood idea. Why should a person end up with equity of loss making bank
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