New Delhi, Feb 28 (IANS) India will have a comprehensive bankruptcy code making it easier for entrepreneurs to exit unviable ventures on the lines prevailing in the US, towards improving the ease of doing business, Finance Minister Arun Jaitely said Saturday.
“Bankruptcy law reform, that brings about legal certainty and speed, has been identified as a key priority for improving the ease of doing business,” Jaitley told the Lok Sabha while presenting the NDA government’s first full budget.
“We will bring a comprehensive Bankruptcy Code in fiscal 2015-16, that will meet global standards and provide necessary judicial capacity,” he added.
The new code will essentially help banks recover dues in case promoters default.
It will replace the Sick Industrial Companies Act (SICA) as well as the Board for Industrial and Finance reconstruction (BIFR) Act which have failed in achieving the objective of bankruptcy law reform, the finance minister said.
A recent celebrated case of corporate default is that of the grounded Kingfisher Airlines, which owes over Rs.7,000 crore to a consortium of banks. The airlines owes the state-run State Bank of India Rs.2,000 crore, while the bank took possession of Kingfisher House in Mumbai earlier this month in a bid to recover some part of its money.