IBC Improves Business Climate By Allowing Easier Exit, Says Nirmala Sitharaman
The Insolvency and Bankruptcy Code has improved business climate in the country by making it easier for enterprises to exit in case of difficulties, Finance Minister Nirmala Sitharaman said on Tuesday.
"Very constant real time changes were brought in (by IBC). We have reached a stage where we can stand up for international standards in ease of doing business...And ease of doing business is the one which is also going to help us very clearly for people wanting to do business and not fear doing business because you are not going to get into this and not know the way to come out," she said.
She said IBC has created a set of professionals who help, advise and also show the path through which businesses can exit if situations are adverse.
"There is scope for enterprise in this country really wanting to benefit from such facilitating environment. Banks feel very relieved that there is a mechanism now. Today, much before admission, a lot of them are getting resolved," she said at an event to mark the third anniversary of the Insolvency and Bankruptcy Board of India.
This shows the readiness with which people are wanting to resolve and get out of business situations which are otherwise not welcome, she added.
Speaking at the event, Minister of State for Finance Anurag Singh Thakur said IBC has brought about a paradigm shift in debtor creditor relationship.
Delay in resolution in some cases has raised concerns over the resolution process under IBC, he said.
Citing example of 12 cases referred by the Reserve Bank of India for resolution under the IBC, Thakur said although seven cases were approved, five are still pending for more than two years.
"We must analyse why five cases are still pending," he said.
The RBI in June 2017 directed banks to file insolvency proceedings against 12 large accounts which amounted to 25 percent of the total non-performing assets at that time.