• UGI USER
  • May 31, 2024
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FM CREDITS IBC FOR AIDING BANKS IN NPA CRISIS RECOVERY

Why in the news?

  • The Finance Minister cites the RBI report emphasizing IBC’s role in aiding banks to recover from the NPA crisis.
  • IBC served as a crucial mechanism for banks to address stressed assets and facilitate recovery.
source:micoope

 About the NPA crisis:

  • Non-Performing Assets (NPAs) are loans where payments haven’t been made for 90 days.
  • Twin balance sheet crisis: Banks and corporates are heavily stressed and overleveraged.
  • NPAs categorized into Substandard, Doubtful, and Loss Assets based on duration.
About Insolvency and Bankruptcy Code, 2016 :

  • Insolvency and Bankruptcy Code, 2016 consolidates bankruptcy laws in India.
  • It provides a time-bound process for resolving insolvency.
  • Applicable to companies, limited liability entities, firms, and individuals.
  • Companies must complete insolvency process within 180 days, extendable.
  • Smaller companies complete the process in 90 days, extendable by 45.
  • Liquidation occurs if debt resolution fails.
  • Regulated by the Insolvency and Bankruptcy Board of India (IBBI).
  • IBBI oversees insolvency professionals, agencies, and information utilities.
  • Licensed professionals facilitate insolvency resolution and manage debtor assets.
  • Adjudicated by the National Companies Law Tribunal for companies and Debt Recovery Tribunal for individuals.

Associated Article:

https://universalinstitutions.com/insolvency-and-bankruptcy-code/