New ordinance will strike wilful loan defaulters another body blow

Finance Minister Arun Jaitley is scheduled to brief the media later today

The cabinet on Wednesday gave the approval to amend the Insolvency and Bankruptcy Code to prevent wilful defaulters from bidding for stressed assets, two TV channels reported citing unnamed sources.

The finance ministry had earlier asked banks to ensure that wilful defaulters were prevented from buying same stressed assets again as it strives to cut the record $147 billion soured loans accumulated in the banking sector.

Finance Minister Arun Jaitley announced approval for the amendments following a cabinet meeting but did not provide details. Local media has widely reported that the amendments will stop wilful defaulters from buying stressed assets that they previously owned.

The government is striving to cut a record $147 billion of soured loans accumulated in the banking sector by making it easier to force companies into insolvency.

Under Indian law, wilful defaulters are classified as firms or individuals who own large businesses and deliberately avoid repayments.

The finance ministry has already asked banks to ensure that wilful defaulters are prevented from buying back assets.