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PYQ 1200 Q/A Part - 1
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Kerala PSC Indian Economy Book Study Materials Page 345
Book's First Pagean in in ndia 12.21 increasing the ultimate recapitalization professionals necessary for the process to work. A bill for the government and the associated large number of cases have entered the insolvency political difficulties. Delay is also costly process. By January 2018, over 525 cases of for the economy, because impaired banks corporate insolvency have been admitted across all are scaling back their credit, while stressed the National Company Law Tribunal (NCLT), as companies are cutting their investments. per the Economic Survey 2017-18. (vii) Progress may require a PARA. The ARCs A major factor behind the effectiveness of (Asset Reconstruction Companies) the new Code has been the adjudication by the haven’t proved any more successful Judiciary—it prescribes strict time limits for various than banks in resolving bad debts. But procedures under it. In spite of the large inflow of international experience shows that a cases to NCLT benches across India, these benches professionally run central agency with have been able to admit or reject applications for government backing (not without its CIRP admissions with few delays. In addition, own difficulties) can provide the solution appellate courts, including the NCLAT, High in this regard. Courts and the Supreme Court have also disposed By late February 2017, Government hinted appeals quickly and decisively. In this process, a towards its interest to the idea of PARA. But before rich case-law has evolved, reducing future legal the idea takes shape several related issues are to be uncertainty. In the CIRP, the Committee of settled by the government, such as—its funding Creditors (CoC) invites resolution plans from mechanism; selection of the companies for their resolution applicants, and may select one of these balance sheet resolution; recovery mechanism of plans. The Code originally does not specify any the banks’ NPAs; etc. among others. restrictions on who these resolution applicants might be though it declares some persons are Insolvency and BankruPtcy ineligible to submit resolution plans— By now several measures were put in place by the (i) an undischarged insolvent; Government/RBI to resolve the ‘twin balance (ii) a wilful defaulter; sheet’ (TBS) crisis faced by the economy but (iii) a borrower whose account has been they could not bring out effective results. Finally, identified as a non-performing asset for we see the Government moving to make the over a year and who has not repaid the insolvency procedure effective to address the amount before submitting a plan; issue. The lenders (banks) and borrowers (private (iv) a person convicted of an offence corporate sector) both have been paying a high punishable with two or more years of financial cost of country’s complex and time- imprisonment; taking process of insolvency and bankruptcy (v) a person disqualified as a director under process. The new Insolvency and Bankruptcy the Companies Act, 2013; Code, 2016 (IBC) was amended and enforced by the Government in November 2017. There (vi) a person prohibited from trading in has been a significant amount of progress in this securities; regard—the entire mechanism for the Corporate (vii) a person who is the promoter or in the Insolvency Resolution Process (CIRP) has been management of a company which has put in place. A number of rules and regulations indulged in undervalued, preferential, or have been notified to create the institutions and fraudulent transactions;