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Changes in IBC will help NPA-laden MSMEs

Norms will ease stressed asset resolution

Resolution of Non-Performing Asset (NPA) cases will be expedited in a big way following changes in the Insolvency and Bankrupts Code (IBC), said the President of Federation of Indian Chambers of Commerce and Industry (FICCI).

Rashesh Shah welcomed the Ordinance to make necessary changes in the IBC for easing the norms for participation of the promoters of the companies in the resolution of their stressed assets, especially Micro, Small and medium Enterprises (MSMEs).

“Enabling MSME promoters to bid for their companies under the IBC resolution process will help in speedy resolution in a large number of cases,” said Shah.

“Easing of the norms for genuine promoters to take part in the resolution process associated with their company will act as a catalyst in the government and Reserve Bank of India’s efforts towards stressed asset resolution,” said Shah.

“While there is a need to keep the errant promoters out of the bidding process for their companies under IBC is a necessity, it is also equally important to give a fair chance to the genuine promoters to be part of the resolution process,” he said.

“Additionally, the decision to treat homebuyers on par with financial creditors will also prove to be a substantial relief for a large section of the society and will also give a boost to the real-estate sector,” Shah added.

He highlighted that higher bids placed for the stressed assets under the IBC process show that it has already started working, and Tata Steel’s acquisition of Bhushan Steel is a clear indication of the potential of the IBC framework in the resolution of the NPA cases.

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