Supreme Court Quashing RBI Circular Doesn’t Dilute The Insolvency Law, Says Official
The Supreme Court's decision to quash the Reserve Bank of India’s circular on referring defaulting companies for insolvency proceedings does not in any manner dilute the Insolvency and Bankruptcy Code, a senior official said.
Corporate Affairs Secretary Injeti Srinivas also said a generic instruction, one size fits all, that if the resolution does not take place within 180 days then on the 181st day, the banks have no other option but to go to the National Company Law Tribunal has been declared ultra vires.
Under the code, insolvency proceedings can be initiated only after getting approval from the NCLT.
“The Supreme Court's judgement in no way dilutes the scope or efficacy of the Code. It does not in any manner dilute the Code,” he said on the sidelines of an event here.
With the circular issued on Feb. 12, 2018, the RBI replaced various debt restructuring schemes with a harmonised and simplified generic framework for resolution of stressed assets.
The circular was quashed by the court on Wednesday.
Speaking at industry body CII's Annual Session, Srinivas said building trust is the core issue for governance.
Corporate scandals in the past few years have raised issues of corporate governance. Building trust is the issue for governance, and trust is a cross-cutting issue in the internal and external environment, he was quoted as saying in a release.