The Union Cabinet has approved the amendment in Insolvency and Bankruptcy Code (IBC). Changes in this bankrupt law will help in the investment in the troubled sector and will also provide protection to the corporate companies taking loans. Apart from this, the Cabinet has approved the Partial Credit Guarantee Scheme, which will now allow public banks to buy assets of Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs).
Negligence Plane will be Fined 1 Crore
The Airplane Amendment Bill 2019 was also approved in the cabinet meeting. If this bill is passed by Parliament, then the year 1934 law will be replaced. The new bill will impose a penalty of Rs 1 crore on airplanes which are negligent during air flight, which was till now Rs 10 lakh. This penalty will be applicable to all areas of air flight.
The Union Cabinet on Wednesday approved the proposal to amend the Insolvency and Bankruptcy Code (IBC) -2016 through the Insolvency and Bankruptcy Code (Second Amendment) Bill-2019. Through this bill, the government wants to remove some of the problems in the insolvency resolution process and to promote business ease. According to the statement of the Finance Ministry, the amendment was approved in the cabinet meeting chaired by Prime Minister Narendra Modi.
The IBC amendment will remove many obstacles. The Corporate Insolvency Resolution Process (CIRP) will be simple. Protection of financing with the last option will encourage investment in sectors facing financial crisis.
An additional threshold limit has been introduced for comprehensive financial lenders, which will be represented by an authorized representative, to prevent disturbances in initiating the Corporate Insolvency Resolution Process (CIRP).
This will ensure that the basis of the business of the corporate borrower is not diluted and its business continues. For this it will be clarified that licenses, permits, concessions, clearances etc. cannot be terminated or suspended during the moratorium period. Also, they cannot be renewed.
Relief for Loan Companies
Under the IBC, the corporate borrower will be provided protection. Under this, no criminal action will be taken against the successful Bankruptcy Solution Applicant for offenses committed by the previous management / promoters.
Partial Credit Guarantee Scheme approved
The cabinet also approved the Partial Credit Guarantee Scheme. The proposal was introduced by state-run banks to promote the purchase of well-rated pooled assets from financially sound non-banking finance companies (NBFCs). According to a statement from the Finance Ministry, under the scheme, public sector banks will be able to buy highly rated pooled assets from strong NBFCs and Housing Finance Companies (HFCs).
