BackDo not use insolvency code for every stressed asset: Junior FM Anurag Thakur
'We should not use NCLT for every case. This is going to help the business community, banks as well''In the last three months, a lot of issues about transfer policies have come to our knowledge. My request to IBA would be to look into the transfer and HR policies'
PremiumMumbai: The finance ministry does not want lenders to use the Insolvency and Bankruptcy Code (IBC) for every stressed asset but refer such matters to the National Company Law Tribunal (NCLT) only when other resolution mechanisms fail, said Anurag Thakur, minister of state for finance.
Addressing bankers at the annual general meeting of Indian Banks' Association on Wednesday, Thakur said, first, there should be an attempt to resolve stressed assets outside the NCLT process, as this would help banks and the business community.
"I would therefore request bankers to try to resolve stressed assets in the right earnest and refer cases to NCLT only of satisfied resolution outside the NCLT is not available. We should not use NCLT for every case. This is going to help the business community, banks as well," he said.
The IBC was enacted in 2016 and until 30 June, financial creditors or banks had filed claims worth ₹2.53 trillion under it. The total recovery has been at ₹1.08 trillion, showing a recovery rate of 42.8%.
Thakur also assured bankers that they would not be penalised and hounded by government agencies just for taking commercial decisions.
"In my interactions with various bankers and officials, I think we have said it time and again, and I will say it again now that the decisions taken by you in course of business in good faith with a sound business rationale will not face any witch-hunt," said Thakur.
He said the government has been listening to the industry leaders and has discussed with bank officials the challenges they face.
The junior finance minister also suggested that IBA look into existing human resource and transfer policies of banks.
"In the last three months, a lot of issues about transfer policies have come to our knowledge. My request to IBA would be to look into the transfer and HR policies," he said, adding that it is difficult for employees, especially for women, to get transferred to distant locations.
“The relocation costs are also on the higher side and it is up to you to look into those areas especially after the mergers that will take place," said Thakur.
Finance minister Nirmala Sitharaman on 30 August announced the merger of Punjab National Bank, Oriental Bank of Commerce and United Bank. The other merger will be between Canara Bank and Syndicate Bank. Also, Union Bank of India will be merged with Andhra Bank and Corporation Bank, and Indian Bank will be merged with Allahabad Bank.
Trade unions of bank employees have criticized the government’s move to consolidate the 10 state-run banks into four entities.
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