The Federation Chambers of Commerce and Industry (FICCI) on Thursday said that the passage of the Bankruptcy Bill is a perfect example of constructive cooperation in parliament towards economic progress.
Harsh Neotia, President, FICCI, said in a statement, "Bankruptcy Act is a much needed legislation for industry that would greatly help resolve issues pertaining to speedy winding up of insolvent companies, lowering NPAs, and redeployment of capital productively."
The FICCI was giving a response a day after the Rajya Sabha had passed a new bankruptcy code.
The opposition, however, had earlier insisted on tougher measures against corporate defaulters so that the nation's banks could be helped to recover over 120 billion dollars (nearly Rs 8 lakh crore at $1 = Rs 66) in troubled loans.
Prime Minister Narendra Modi had also promised to introduce a code to address bank debts and improve the ease of doing business in Asia's third largest economy.
India's efforts to clip the wings of high-profile debtors suffered a setback in March when tycoon Vijay Mallya flew to London as bankers pressed him to repay about 1.4 billion dollars(around Rs 9,000 crore) owed by his defunct Kingfisher Airlines.
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The insolvency and bankruptcy code, earlier passed by the Lok Sabha, is expected to strengthen hands of lenders to recover outstanding debts by setting a deadline of 180 days for companies to pay or face liquidation.
The new law will make borrowers think twice before they think of defaulting on their loans.
The Debts Recovery Tribunal and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act which exist now won't be able to interfere with this law. The 180-day period during which an insolvency case will be tried unde this law will be a moratorium and no other judiciary can interfere.
The law also calls for the setting up of between 15 to 20 National Company Law Tribunals to hear insolvency cases.
One major change is that insolvency practitioners will be appointed as administrators. Today, there is only one high court official who looks after the winding-up of a company.