The Insolvency and Bankruptcy Code has a provision for resolution of financial service providers and there is a thinking that such a solution could be looked at till the FRDI legislation is in place, according to IBBI chief M S Sahoo.
The Financial Resolution and Deposit Insurance (FRDI) Bill would provide a dedicated framework for financial service providers.
Sahoo said the Code has Section 227 that allows the government to notify certain financial service providers for the purpose of insolvency resolution proceedings in the manner as may be prescribed.
"It is possible to resolve some financial service providers at least those which resemble normal corporate debtors," he noted.
Sahoo, who is the chairperson of the Insolvency and Bankruptcy Board of India (IBBI), also said there is a thinking that is it possible to provide some solution under the IBC till a regular FRDI law comes in.
"We have to wait to see what FRDI provides for," he said.
Currently, resolution of stressed financial institutions cannot be taken up under the Insolvency and Bankruptcy Code (IBC).
Last week, a senior official said the government was mulling a special window to address debt woes of stressed non-banking financial companies under the insolvency law.
The effort is to come out with some mechanism to deal with financial services providers which require some resolution under an alternative framework pending the FRDI Bill or till some specific provisions are put in place, the official had said.
The official had also said the government was likely to notify Section 227 of the Code.
Persisting liquidity issues in the NBFC (non-banking financial company) space as well as the financial woes of some groups in this sector have raised concerns about the health of the overall financial system.
On whether there are plans to have a threshold for homebuyers to seek resolution, Sahoo said there is nothing rigid and if there are difficulties, then those would be addressed.
"Initially, homebuyers were not financial creditors. Then, a need came up and the government decided to make them financial creditors... If there are difficulties in implementing that, then the government is also willing to address the difficulties. There is nothing rigid... If there are difficulties, then let us address the problems," he noted.
Many realty companies are facing proceedings under the Code.
Meanwhile, the IBBI has proposed an electronic platform to provide details about corporate debtors.
"There is a proposal from the IBBI side to have an electronic platform where every detail of every corporate debtor is available for all potential resolution applicants. They can see the full pipeline and they can decide whether to submit the resolution plan or not," he added.
He was speaking on the sidelines of a conference organised by industry body CII.