The government is willing to make further changes to the Insolvency and Bankruptcy Code (IBC) which has become a game changer in resolving the massive non-performing assets (NPAs), or bad loans, problem of India's banks and creating a market for stressed assets, a senior official said on Friday.
Speaking at the Insolvency and Bankruptcy Reforms Conference in New Delhi organised jointly by the Insolvency and Bankruptcy Board of India (IBBI) and the Indira Gandhi Institute of Development Research, Corporate Affairs Secretary Injeti Srinivas also sought to dispel certain "myths" about the Code, including on provisions related to barring of wilful defaulters from the bidding process for stressed assets brought under the IBC.
"It is a game changer. The future contours of the Indian economy will be positively influenced by this. The government is more than willing to take any good suggestion, evaluate it and bring further changes in the IBC, if required," Mr Srinivas said.
He said the law, which has already been amended four times, has achieved much in less than two years since it was enacted. Earlier, the rules were focused on recovery instead of resolution, thereby losing much economic value in the stressed assets.
"The code has already undergone four amendments. It clearly shows that the government means business and is working towards redefining the rules of the game," Mr Srinivas said.
India has made a significant progress in terms of the four parameters of the World Bank's insolvency resolution framework -- time taken for resolution, insolvency cost, outcome and recovery.
"On all these parameters, we have within two years jumped more than 30 ranks. On the insolvency resolution framework, we were ranked 136 but now we have come to 103," the Secretary said, adding India will rise further in the World Bank rankings next year after the IBC amendments are operationalised.
He also said it was not true that the IBBI, which executes the IBC, prevents promoters from bidding for the stressed assets.
"This is a myth. Section 29(A) will show you that we prevent an undesirable resolution applicant, including a promoter. We have not prevented the promoter alone," he said.
Mr Srinivas also denied that there was no competition in bidding for stressed assets.
"People are bidding and re-bidding. In fact, in the steel sector, land itself is a big attraction and therefore there is a lot of competition."
The Secretary had said earlier this year that less than half of the staggering Rs 9 lakh crore worth of NPAs accumulated by banks had returned due to the system set in place by the IBC.
Noting that the Reserve Bank of India had referred 12 accounts, totalling about 25 per cent of the gross NPAs, for resolution under the IBC in June last year, Srinivas said a "good outcome" on half of these cases would help boost confidence in the system, a key component of which is the National Company Law Tribunal (NCLT)- the final adjudicator.