New Delhi. Finance Minister Nirmala Sitharaman on Thursday slammed the Congress while referring to the benefits of the Insolvency and Bankruptcy Code. She said that the Congress party always refrained from taking progressive steps for the development of India and it pursued policies that took the country backwards.
He said, “Despite the dire need to make a bankruptcy law, the Congress-led UPA government deliberately tried to benefit its close ones at the expense of banks and operational lenders. Whereas the lenders had to run from door to door to recover their dues.” The Insolvency and Bankruptcy Code (IBC) provides a market-linked and timely solution in case of stressed assets.
Senior BJP leader Sitharaman said that by making operational rules for companies in crisis, IBC has taken corporate governance in the country to new heights. She wrote on the social media platform ‘X’, “It is certain that the resolution process under IBC can take the defaulting companies away from the existing promoters/management. As a result, better governance system has come in such companies.” Sitharaman said that before the implementation of IBC, legal patches were resorted to to resolve the crisis in companies. This complicated the problem instead of solving it.
She said, “Like GST, Congress has never been keen to take steps to build consensus to push reforms forward. The party has always shied away from taking progressive steps for India’s growth and development and has always pushed policies that take the country backwards.” Sitharaman said that IBC brought about a significant change in the relationship between lenders and borrowers and has provided a systematic, one-stop solution to resolve insolvency cases. Prioritizing resolution over liquidation in the law has helped preserve jobs and maintain the value of assets.
Giving figures, he said that since its inception in 2016, 3,171 companies facing problems have been saved through IBC till March 2024. At the same time, unviable companies were helped to close down. Whereas under the earlier Board of Industrial and Financial Reconstruction (BIFR) system, less than 3,500 cases were resolved in about 30 years since its formation in 1987.
The Finance Minister said, “Overall, lenders have recovered an amount of Rs 3.36 lakh crore through IBC. This is about 32 percent of the total amount claimed and 162 percent of the liquidation value. On an average, about 85 percent of the fair value of stressed companies is being achieved through resolution plans.” He said that the IBC framework is constantly evolving and the government has taken several steps to strengthen the insolvency and debt recovery system and ensure timely resolution.
Sitharaman said, “We are committed to strengthening the capacities of NCLT (National Company Law Tribunal) and NCLAT (National Company Law Appellate Tribunal) across the country by rapidly filling the vacant posts.”
The Finance Minister said that IBC has played a vital role in helping banks recover from the NPA (non-performing asset) crisis created by the Congress and its allies during the UPA regime through ‘phone banking’ (calling banks and asking them to give loans) and indiscriminate lending.