Modi government gives life to defaulters, banks can't declare bankrupt for a year

New delhi date. 19 September 2020, Saturday

The Insolvency and Bankruptcy (Second Amendment) Bill 2020 was passed in the Rajya Sabha today. Finance Minister Nirmala Sitharaman (FM Nirmala Sitharaman) introduced the bill in the Rajya Sabha. Introducing the bill, the finance minister said an ordinance was passed in the first week of June. It was decided to save the lives of people trading in the epidemic amid the lockdown. In such a situation the business has suffered. As a result, the market has also been affected and the economy has suffered.

Professionals faced massive problems
Obstacles to the way companies operate in such a situation must also be taken into account. In such a situation the risk of bankruptcy on companies increases. Also, professionals have encountered massive problems. This is the reason why sections 7, 9 and 10 of this code should be suspended.

Has the central government changed?
In June this year, the central government amended the Insolvency and Bankruptcy Code by an ordinance. After this amendment, companies (banks or companies that are in arrears) cannot be drawn into IBC (courts) by companies defaulted due to the Kovid-19 epidemic. The government has recently suspended sections 7, 9 and 10 of the IBC by ordinance. If you understand in simple language, you have taken a loan from a bank to run your business and due to non-payment of the loan you are afraid that if you are not prosecuted under IBC it has been arranged. The Central Government has approved the implementation of a new ordinance relating to insolvency.

What is IBC?
Under the Insolvency and Bankruptcy Code, defaulting defaulters are required to repay the loan within the stipulated time. These efforts have improved the financial position of the banks to some extent.

What does this bill mean?
Accordingly, CIRP cannot apply against any company for the next 6 months or 1 year from March 25, 2020, i.e., they cannot be taken to IBC. The government has just stopped the process because the number of defaulting companies is too high. Section 10 will not apply to defaulting companies from March 25 for the next six months or 1 year.