Why the Bankruptcy Code is turning into a double-edged sword for banks

Recent tribunal rulings open prospects of large haircuts and barriers to auctioning of personal guarantees, among other issues

Are banks getting boxed in after the introduction of the Bankruptcy Code? Some signals seem to be pointing that way.

Not only are they looking at prospects of steep haircuts (write-offs) on their loans, the Code would also mean banks losing their business to the bond market. The Code is also upsetting the traditional rules of the games, where banks sold the personal guarantor's assets if a company was in default. This Monday, a ruling of the Chennai bench of the National Company Law Tribunal (NCLT) stopped State Bank of India (SBI) from trying to do so.

The case in question was