Insolvency and Bankruptcy Code
Borrower Beware The latest total NPA figures of banks in India has reached a whopping Rs. 7.10 Lakh Crores, which is clearly alarming. Banks which have breached the thresholds set by the Government of India have been placed under PCA (Prompt Corrective Action). Many defaulting borrowers have enjoyed interest concessions, partial/full write off of debts which have greatly harmed the balance sheets of banks. NPAs and provisioning have steadily eroded their capital at a time when they are gearing up to meet the stiffer Capital Adequacy norms under BASEL III. What has led to this sorry pass? There has been no dearth of legislations: a) Civil Procedure Code 1908, b) Sick Industrial Companies (Special Provisions) Act 1985 c) Recovery of Debts due to Banks and Financial Institutions Act. 1993. d) Securitisation, Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI). But these laws have proved ineffective in combating the ...