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Cabinet takes decision to scrap BIFR

Tara Shankar Sahay in New Delhi

The Union Cabinet on Thursday decided to scrap the Board for Industrial and Financial Reconstruction, according to a senior official of the Prime Minister's Office.

The official added BIFR would be replaced by a new body called the Debt Recovery Tribunal.

He indicated that it was also decided to bring in insolvency laws under the Companies Act, so that DTR would be able dispose off assets of companies, which were in the red.

He said the insolvency laws would help the DRT best determine how to dispose assets of companies defaulting on repayment of loans.

Referring to the banking sector, the official pointed out that it had Rs 600 billion of 'non-performing assets (bad loans)', which was one of the reasons for the cabinet decision to scrap BIFR.

The Union Cabinet had earlier proposed the scrapping of the BIFR, but a decision had eluded it following objections by some ministers.

The official indicated that a briefing on the cabinet meeting would be held on Friday.

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