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IBC ordinance will pave way for clean business by promoting integrity: Finance Ministry

The ministry of finance has said that India's news Insolvency and Bankruptcy Code (IBC) ordinance, promulgated by the President, will pave the way for clean business by putting a premium on integrity. It pointed out that the ordinance does not seek to provide any respite to loan defaulters while on the other hand it explicitly prohibits them and their associates from reclaiming assets under resolution at a discount. It added that the ordinance is primarily aimed at safeguarding the public money from being misused by dishonest businesses.

Observing that there were reports that some defaulting promoters were trying to buy assets at huge discounts in clandestine manner, the ministry said that it was moral and ethical responsibility to prohibit entry of such misuse of public money. It also said that business will have to either perform or exit and there is absolutely no room for wilful defaulters or dishonest business. It added that the move is against unscrupulous elements in the business who were using the banks' money irresponsibly.

It also said that despite defaults, the accounts were not realistically declared non-performing assets (NPAs) and were kept under the carpet by restructuring them through further financing. It noted that the ordinance will ensure recovery of bank loans from defaulting corporates and the Reserve Bank of India (RBI) has already taken steps to recover Rs 1.75 lakh crore from 12 corporates under the insolvency law. It added that banks have already filed cases in National Company Law Tribunal for resolution of these 12 cases of big default, which is about 25 percent of the total NPAs.

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