Bankruptcy law to be tabled in Parliament during upcoming monsoon season

The government is likely to introduce in the monsoon session of Parliament a separate bankruptcy law to deal with insolvency in financial sector companies that include banks and Non-Banking Financial Companies (NBFCs).

The proposed bill will cover all financial service providers that include banks, NBFCs and microfinance institutions which have money deposited, a senior finance ministry official has said.

The law will help safeguard the interest of depositors, he added.

The Insolvency and Bankruptcy Code (IBC) 2016 was passed by Parliament last year to deal with cases of corporates or companies other than the financial sector.

“The proposed legislation for resolution of bankruptcy in financial firms are under works and our endeavour is to introduce in the upcoming monsoon session of Parliament,” the official said.

“Financial firms by their nature and characteristics, have depositor money as well. So, an appropriate resolution processes for orderly winding down of financial firms is not an easy process,” the official said adding, extensive consultation with various stakeholders are on to make a watertight law.


Go to Source