IBC Reboot: Relief For Home Buyers in Sight
The much-awaited IBC reboot is finally here. After a meeting of the Union Cabinet, Law Minister Ravi Shankar Prasad said the government has approved some key changes to the Insolvency & Banking Code, based on the recommendations made by a 14-member panel headed by Corporate Affairs secretary Injeti Srinivas.
Although the minister did not reveal the specifics, reports suggest that the green light has been given to a proposal to treat home buyers as financial creditors, which will allow them to participate in insolvency proceedings.
Another key change is the relaxation in Clause 29(A) of the IBC, which bars defaulting promoters from bidding for their own assets. This clause was added to the IBC in November last year to prevent the backdoor entry of willful defaulters to win back their own assets at huge discounts, but in effect it made life difficult for micro, small and medium enterprises. Mr Prasad said the government will now effect the changes by promulgating an ordinance, which will be sent to the President for his final assent.
But will the muchawaited IBC reboot help lenders get their money back from defaulting companies? Considering the long legal tangles, will it really provide a buffer for home buyers? Also, will the new changes provide a safety net for MSMEs that may have gone belly up for no fault of theirs. On ET NOW’s India Development Debate, banking experts and economists discussed the changes to the IBC. Here are some key takeaways: