The Centre’s approach to Insolvency and Bankruptcy Code has costs
The Banking Regulation (Amendment) Act, 2017 undercuts the credibility of institutions and the predictability of the law
One year ago, the Reserve Bank of India (RBI) issued a press release identifying 12 accounts, comprising about 25% of the gross non-performing assets (NPAs) of the banking system, as eligible for “immediate reference under IBC". It did so using the powers conferred on it by the Banking Regulation (Amendment) Ordinance, 2017. The ordinance empowered the Central government to authorize RBI to direct banks to trigger the Insolvency and Bankruptcy Code (IBC) in respect of a default. It also empowered the RBI to issue directions to banks for the resolution of stressed assets.