MUMBAI | KOLKATA: The regulatory and government drive to resolve the bad loans issue is likely to crowd the bankruptcy courts which till now remained deserted because bankers weren’t very keen on using them.
“I can see that IBC (Insolvency & Bankruptcy Code) is on the table when strategy for distress situation is being discussed,“ said Abhijit Joshi, founding partner, VeritasLegal.“Previously the threat of winding up was not a great threat, but now it’s a credible deterrence which slowly but surely is being taken seriously.“
According to RBI data, the stressed asset ratio in the banking system has crossed 12.3% at the end of September 2016, and rough estimates suggest that stressed loans in the system are more than Rs 10 lakh crore.
“Considering the fact that stressed assets in the system have reached deplorably high levels, the ordinance will enable banks to take stringent action, particularly initiate insolvency in respect of default under Insolvency and Bankruptcy Code, 2016,“ said Alok Gupta, director-taxation with Agora Partners, a Delhi-ba sed consulting firm.
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