Parliamentary panel for dedicated NCLT, NCLAT courts for IBC cases

A parliamentary panel recommends dedicated NCLT and NCLAT courts to expedite IBC cases and urges the RBI Governor to support banking correspondents, who are facing increasing challenges in their roles

A meeting of the parliamentary panel on finance on Thursday discussed the need to make some provisions of the Insolvency and Bankruptcy Code (IBC), 2016, more robust, especially setting up “dedicated” National Company Law Tribunal (NCLT) and National Law Appellate Tribunal (NCLAT) courts to expedite cases.

 

With the government set to introduce amendments to the code in the Monsoon Session, the Parliamentary Standing Committee on Finance has expanded its agenda of reviewing the functioning of the IBC.

 

Until now, it has tried to understand the perspectives of the banks. In its subsequent meetings, it will examine its impact on the industry, especially the micro, small and medium enterprises (MSME) sector. It could submit its report on the IBC during the monsoon session, sources said.

 

 

At its Thursday’s meeting, the panel met representatives of four public sector banks – State Bank of India, Indian Bank, Bank of Baroda and Indian Overseas Bank - in the morning on the subject of “review of the working of the IBC and emerging issues”.

 

During the discussions, it was pointed out that under the existing law the corporate insolvency resolution procedure (CIRP) process has to be mandatorily completed within 330 days, but the average currently is 507 days. In that context, the panel suggested setting up of “dedicated” NCLT and NCLAT courts for IBC cases.

 

The discussion flagged the need for the law to cover cross-border insolvency and group insolvency, which it currently does not address. Members wanted to know the factual position related to the Bhushan Power and Steel Limited (BPSL). The Supreme Court had in May quashed JSW Steel’s resolution plan for BPSL, but the case is still sub-judice, the representatives of the banks argued. Panel members pointed out that it does not bar either Parliament or a Parliamentary Standing Committee to discuss the issue.

 

  

Later in the day, Reserve Bank of India (RBI) Governor Sanjay Malhotra was to brief the panel on the subject of the IBC and emerging issues. However, members of the 31-member panel, which Bharatiya Janata Party (BJP)’s Lok Sabha member Bhartruhari Mahtab heads, wanted to know from Malhotra about the economic challenges the country is facing.

 

Malhotra briefed the panel on the steps that the central bank is taking in the face of global headwinds, and explained its position on cryptocurrency, among other issues. The panel is likely to ask the RBI representatives to appear before it on July 23 to discuss IBC.

 

During its meeting with the governor, panel members expressed concern at the “alarming situation” of more than 250,000 banking correspondents quitting their jobs because of lack of support from their respective banks. The panel urged the RBI to direct banks to provide laptops with internet access to banking correspondents, who play a crucial role in providing banking services in unbanked and under-banked areas.

   

  

Members also asked the RBI about the efficacy of the grievance redressal systems of banks and the mechanism of the Banking Ombudsman, and wanted to find out how many complaints it has received. Issues such as cybercrime and the problem of fake currency notes, especially of Rs 500 denominations, also came for discussion.

 

The panel had met representatives of the Union Bank of India, Punjab National Bank and Canara Bank on May 28 and 29 on the subject of IBC, as also those of the Insolvency and Bankruptcy Board of India (IBBI).

 

Apart from Mahtab, the 31-member committee includes former Union ministers and Congress MPs P Chidambaram and Manish Tewari, Congress’ Gaurav Gogoi, Trinamool Congress’ Sougata Roy, Revolutionary Socialist Party’s N K Premachandran, former Union minister and BJP MP P P Chaudhary and Shiv Sena’s Milind Deora.

 

Apart from amendments to the IBC, the Finance and Corporate Affairs Ministries are also likely to move the Income Tax Bill, Insurance Bill and the Bill for Banning of Unregulated Lending Activities in the Monsoon Session of Parliament from July 21.