President Ram Nath Kovind approves bankruptcy code ordinance

New Delhi: NDA's presidential nominee Ram Nath Kovind arrives to attend an NDA meeting at Parliament in New Delhi on Friday. PTI Photo by Subhav Shukla (PTI6_23_2017_000151B)

New Delhi: President Ram Nath Kovind on Thursday approved an ordinance to introduce changes to the Insolvency and Bankruptcy Code, informed sources said.

The ordinance was approved by the cabinet on Wednesday.

On Wednesday, the Cabinet cleared “some changes”, said Arun Jaitley, Union Minister of Finance and Corporate Affairs, but stopped short of disclosing the specifics.

Sources in the corporate affairs ministry said the amendments are aimed at resolving issues pertaining to promoters manipulating certain provisions to take back the company, using the clauses of insolvency.

These changes, being brought via an ordinance, bar wilful defaulters from bidding for the assets, but don’t explicitly prevent promoters from wresting back control.

The Bankruptcy Code, which became operational in December last year, provides for a market-determined and time-bound insolvency resolution process.

The Ministry of Corporate affairs recently set up a 14-member committee to identify and suggest ways to implement IBC effectively.

In June, the Reserve Bank of India first identified 12 large accounts, accounting for a quarter of the banking system’s gross NPAs. It added another 29 firms subsequently and gave banks time until December to resolve the cases, failing which they will be taken up under bankruptcy proceedings.