Clipped from: https://economictimes.indiatimes.com
Subramanium was talking at a webinar titled- “COVID 19: Constitutional and Legal Conundrums”, which was organised by Bennett University’s School of Law on Friday. The former solicitor-general said that due to the IBC, banks are able to advance loans with more ease. This will lead to a healthy business environment.
NEW DELHI: The insolvency and bankruptcy code (IBC) has proven to be a “game changer” for the financial institutions in the country, providing a much-needed shot in the arm, said former Solicitor General of India Gopal Subramanium.
“The code has managed to convert non-performing assets to performing assets, proving common perceptions wrong,” said Subramanium, talking about the law that consolidated all insolvency and bankruptcy rules together.
Subramanium was talking at a webinar titled- “COVID 19: Constitutional and Legal Conundrums”, which was organised by Bennett University’s School of Law on Friday.
The former solicitor-general said that due to the IBC, banks are able to advance loans with more ease. This will lead to a healthy business environment. “Securing funds from banks at minimal cost will boost productivity for MSMEs, where maintaining a healthy cashflow is imperative” noted Subramanium.
“The vendors, employees, and the government of India are more at ease,” he said.
Currently a senior advocate at the Supreme Court, Subramanium served as the solicitor-general of India between 2009.
The record-high of foreign reserves in excess of $500 billion are also a very positive sign for India, he said. “The sovereign credit rating at BBB and A3 short ratings is encouraging,” said Subramanium. These ratings reflect well on the potential for growth, he said.
Currently, only China and Japan trump India in the total value of forex reserves.
Subramanium also lauded the Reserve Bank of India‘s moves to increase the moratorium on loan repayments, saying that they came at a crucial time when businesses all over the country were struggling. He added that RBI’s quick action to create a solution that immediately helps individuals and companies bodes well for the ease of doing business concerns that some have raised in the past.
However, the current institutions that deal with the financial recoupment of distressed assets are also spread thin, admitted Subramanium. Both the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) are currently handling too many cases, he said. “The case burden on the NCLT currently is overwhelming,” he said.
To that end, Subramanium suggested some changes. Combining both the NCLT and NCLAT to a three-member tribunal is one such avenue. Subramanium said that this would lead to the reduction of the workload of the bodies, and ensure faster resolutions.
Another solution mooted by the advocate was to appoint only “outstanding” people to run the tribunals, in order to reach faster and more amicable resolutions. He also added that an independent audit of the solutions was necessary.
“An independent verification after a speedy resolution through the IBC process is crucial,” said Subramanium.