The remarks by the CJI came against the backdrop of the recent remarks by Vice President Jagdeep Dhankhar who questioned the landmark 1973 Kesavananda Bharati case verdict that gave the basic structure doctrine.
'The concern that the bad bank may create a moral hazard for the system is extremely valid.'
Whether it was the MGNREGS or the NFSA or the Aadhaar-based DBT scheme for cash transfer, the Modi government has built on the basic architecture created by the Singh government. Policy makers in the Modi government, instead of discarding them as products of the previous political regime, worked on them, expanded their scope and reach, and used new tools to improve their performance, explains A K Bhattacharya.
The system envisaged under the FRDI Bill, if implemented properly, would help improve the efficiency of capital allocation without harming consumers, and without risking the stability of financial firms, says Ajay Shah.
While passing the scrutiny of courts is a tough challenge, with eight proposed amendments to the insolvency law, the government has sought to turn the focus back on at least some of the functions of the bankruptcy law.
With 600-700 new NPA cases getting admitted into NCLT every month, the demand for resolution professionals is on the rise with their number more than doubling in less than a year.
Noted banker Uday Kotak said the country's financial system is currently in a Darwinian mode as only the fittest lenders are able to survive. Kotak also said that historically, whenever there has been a problem with a private sector lender, it has been merged with a state-run bank.
After taking action against 226,000 shell companies last year, the ministry of corporate affairs has now zeroed in on a fresh batch of suspected shell companies.
Nifty PSU bank index dropped nearly 2%
Even existing cases might come under the proposed law, including those of Vijay Mallya, Nirav Modi and Mehul Choski. But, the law would not cover earlier cases.
The haircut for major banks stands at 52 per cent, if the dues of Jaypee Infrastructure, Lanco Infrastructure and Era Infrastructure are kept out of the calculation.
'What do the moves towards protectionism suggest?' 'That we do not have Aatmavishwas.' 'If you have self-confidence, confidence in your ability to compete with the best in the world, why do you need protectionism?'
The statement, issued after the 2-day meeting of the 6-member Monetary Policy Committee of the Reserve Bank of India, also said that recapitalisation of public sector banks along with resolution of stressed assets under the Insolvency and Bankruptcy Code (IBC) will create demand for fresh investments.
'I suspect the recovery that the banks are going to get out of this IBC is not going to be more than 30 per cent.' 'If you leave the steel industry aside, the recovery rates are not looking very, very healthy,' Jairam Ramesh tells the Rajya Sabha.
About 50 per cent of the accounts that availed of the EMI moratorium amid the pandemic, which made things worse in an already slowing economy, are expected to be restructured, and of these accounts that would undergo restructuring, one-third, or Rs 6-9 trillion, could turn into NPAs.
The opposition will seek to target the government on the issue of farmers' plight as well as their demand for a legal backing for minimum support price.
Listing the series of reforms which led to the upgrade, he said while demonetisation took the economy towards greater formalisation and digitisation, use of Aadhaar ensured targeted delivery of government benefits.
The recent amendments to the IBC practically barred promoters from re-acquiring their own assets, leaving only a small window to convert their non- performing assets into standard assets by paying the overdues.
The National Company Law Tribunal on Tuesday approved the Jalan-Kalrock Consortium's resolution plan for the bankrupt Jet Airways.
Markets watchdog Sebi on Tuesday decided to tighten norms for utilisation of IPO proceeds by companies, introduce special situation funds to invest only in stressed assets and amend various regulations, including those on mutual funds and settlement proceedings. The board of Sebi, which met on Tuesday, also gave its nod for amending Foreign Portfolio Investor (FPI) regulations and introducing a provision for appointment or re-appointment of any person, including as a managing director or a whole time director or a manager, who was earlier rejected by the shareholders at a general meeting. Once the amended norms are in place, such appointments or re-appointments can only be done with the prior approval of the shareholders.
RBI would like to work on examining the regulatory framework for the voluntary withdrawal by the entrepreneur.
Prime Minister Narendra Modi on Thursday said his government is using all channels including diplomatic to bring back high-profile economic offenders, leaving them with no option but to return to the country. Speaking at a symposium on credit flow and economic growth, he asked banks to support wealth and job creators with proactive lending while promising to stand by any loans given in right earnest. "In our attempt to bring back fugitive (economic offenders), we relied on policies and law and also used diplomatic channels.
The closure of BPSL would add about three million tonnes capacity to JSW Steel's existing 18 million tonnes.
For the second year in a row, India has been recognised as the fifth-best performing nation in reforming the business environment. However, in the two categories that the government was banking on most - "Paying Taxes" and "Resolving Insolvency" - landmark reforms that were expected to yield better results have had the opposite effect. Under the circumstances should the country celebrate already or are there any reasons for worry, wonders Subhayan Chakraborty.
The government on Tuesday extended the deadline for filing income tax and GST returns, raised the threshold of default that could trigger insolvency of a company, and waived charges on cash withdrawals from ATMs of other banks as a precursor to a broader stimulus package for the economy distressed by the coronavirus outbreak.
India's goal of self-reliance has been paramount in the policy and practice of the country. The COVID-19 crisis gave us lessons on how to speed up efforts in that direction, he said.
"The fourth quarter results of GDP data showed a phenomenal 7.7 percent growth rate and has established India firmly as the fastest growing global economy. This trend, according to experts, is likely to continue for the next few years," Jaitley said in a Facebook post.
The code says the process is intended to balance the interests of all stakeholders and the resolution plan is also required to make a statement as to how it has dealt with these interests.
Bankruptcy proceedings are going at a slower pace than what the bankers had envisaged and many cases have gone beyond the 270-day timeline set under the IBC mainly because of litigation.
Sebi has restructured its advisory committee on market data that recommends policy measures pertaining to areas like securities market data access and privacy. Rejigging its market data advisory committee, Sebi has said the panel will now have 21 members, as per the latest information with the regulator. Earlier the committee had 20 members. The committee is chaired by M S Sahoo, Professor at National Law University, Delhi and former chairperson, Insolvency and Bankruptcy Board of India (IBBI).
'The quick fixes have failed; there is now no alternative to deeper reforms,' says Ajay Shah.
These are the four primary issues that have soured the relationship between SBI-led lenders and JKC and delayed the resumption of commercial flights by Jet Airways, once India's largest private airline, which went bankrupt in 2019. Over the past three years, the airline went through an insolvency process under which JKC's resolution plan was approved by a committee of creditors (lenders) and the National Company Law Tribunal (NCLT) in October 2020 and June 2021, respectively. But this didn't mean an end to the problems.
State-run lenders will take a lead in creation of the bad bank, but the sick asset resolution platform needs the support of private banks and other lenders to be successful, State Bank of India managing director Swaminathan J said on Thursday. If all lenders come on board, the National Asset Reconstruction Company (NARC) announced in the budget will be able to aggregate 100 per cent of a sick company's outstanding loans, which shall ultimately lead to better resolution of the asset quality stress for all. The government is yet to announce the specific contours of the NARC or the bad bank and has also only said that it is willing to provide some sovereign guarantee to help the platform.
"This is the third year in a row that India makes to top 10 in Doing Business, which is a success which very few countries have done over the 20 years of the project, Without exception, the other countries that have done this are very small, population-wise, and homogeneous," Simeon Djankov, Director of Development Economics at the World bank told PTI in an interview.
RBI deputy governor N S Vishwanathan has said the new framework was in line with the Insolvency and Bankruptcy Code guidelines.
NBFCs are facing the heat of a crisis at IL&FS, which defaulted on repayment of its commercial paper dues, leading to a contagion effect in the sector.
Apart from easing the NPA pressure on domestic banks, the RBI's move can allow companies to raise cheap, long-term loans easily now.
The government would be ironing out issues related to the controversial 'bail-in' clause in the earlier Bill, explore hiking the deposit insurance cover of customers, and decide whether the resolution framework should apply to public sector banks.
On resolution of stressed cases, she said ICICI Bank has been taking the lead in several cases and was the first bank to refer a case to NCLT
'Some business families would probably have to revert to their core businesses, which the IBC will ensure.'
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