New Delhi, Dec 23 (IANS) The development of a full-fledged corporate debt market in India will depend on the Bankruptcy Code now before parliament, Minister of State for Finance Jayant Sinha said on Wednesday.
“The Bankruptcy bill is a money bill and we are focused on expediting it. The development of a corporate debt market in India will depend on the new bankruptcy code,” Sinha told media here.
Finance Minister Arun Jaitley on Tuesday introduced the Insolvency and Bankruptcy Bill, 2015, in Lok Sabha, which proposes a single bankruptcy code with deadlines for processing insolvency cases.
“It is equally important to develop a full-fledged corporate debt market, establishing creditor rights, particularly for financing infrastructure,” Sinha said.
“Sebi (Securities and Exchange Board of India) has done a good job in protecting minority shareholder rights. A bankruptcy code will protect creditor rights,” he added.
The Lok Sabha on Wednesday decided to refer the Insolvency and Bankruptcy Code, 2015 to a joint select committee of parliament.
Moving the motion in the house, Jaitley said the committee will have 20 members from the Lok Sabha and 10 from the Rajya Sabha.
Elaborating on the progressive nature of the new bankruptcy code, Jaitley told the house on Tuesday that the order of priority had been changed in the bill’s “waterfall provision”, whereby workmen and secured creditors would have first right on the assets, before the tax authorities.
The bankruptcy bill also provides for creation of an Insolvency and Bankruptcy Fund and an Insolvency and Bankruptcy Board of India to regulate insolvency professionals, agencies and information utilities.
The proposed law aims to reduce delays in resolution of insolvency cases and improve recoveries of amount lent to companies. The draft bill has proposed a timeline of 180 days, extendable by another 90 days, to resolve cases of bankruptcy.
The new bankruptcy code will help India in the World Bank’s ease of doing business ranking. India is currently ranked 136 on this count in the 189-country ranking.