Finance Minister Piyush Goyal introduced the Insolvency and Bankruptcy Code (Second Amendment) Bill 2018 in the Lok Sabha on Monday.
It will replace the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018. The bill brings about significant changes to improve the insolvency resolution framework in the country.
Mr Goyal said, the laws of recovering the loan in the time of the previous governments were very weak and the loans were not recovered from, what he called, the big ones.
He said, the big ones used to think that it is the bank’s responsibility to recover the loan.
Opposing introduction of the bill, Bhartruhari Mahtab of BJD raised the point regarding the provision of the Bill related to the reduction of voting threshold on the creditor’s committee.
Mr Goyal said, when the Insolvency and Bankruptcy Code was introduced the country’s banking sector was going through a serious crisis and everyone were very much aware where the genesis of that crisis lies.
He said, Prime Minister Narendra Modi had spoken about the dire financial stress that the Indian banking system was facing because of indiscriminate and absolutely baseless lending that happened during the period of 2008-14.
The Minister said, when the present Government took over, the stress in the banking sector including the stressed assets and the NPAs was humungous and it was because of bad lending prior to 2014.