In a much needed respite to companies battered by the coronavirus-led nationwide lockdown, the Union Cabinet on Wednesday approved the proposal to suspend insolvency proceedings under the Insolvency & Bankruptcy Code (IBC) for non-performing assets for six months. This will be applicable for NPAs (non-performing assets) after March 25, with a provision to extend up to one year.
In her series of press conferences on the Rs 21 lakh crore 'Atma Nirbhar' economic package, Finance Minister Nirmala Sitharaman had said last month that no fresh insolvency will be initiated for one year depending upon the COVID-19 situation. The Finance Minister had added that coronavirus related debt would be excluded from the 'default' category under the IBC Code to further enhance ease of doing business.
In a bid to protect smaller companies, the FM had proposed to raise minimum threshold to initiative insolvency proceeding to Rs 1 crore from Rs 1 lakh, adding that an ordinance will be promulgated to bring this change in IBC. The government had also proposed to suspend Section 7, 9 and 10 of the IBC Code for six months to prevent firms from getting forced to insolvency due to the COVID-19 stress.
This is the second time the Union Cabinet has met this week. The first meeting was held on June 1 when the Modi-led NDA government entered its second year in office.
Among other major announcements, Union Cabinet, chaired by Prime Minister Narendra Modi, approved the amendment of the Essential Commodities Act allowing farmers to sell their produce in any market across India. The Cabinet also approved several measures to help farmers double their incomes.
The government also gave nod to the establishment of Pharmacopoeia Commission for Indian Medicine & Homoeopathy (PCIM&H) as Subordinate Office under the Ayush Ministry. It also approved the setting up of an "Empowered Group of Secretaries (EGoS) & Project Development Cells (PDCs)" in ministries and departments for attracting investments in India.
Among others, the Kolkata Port Trust has been renamed Syama Prasad Mookerjee Trust, while the government has relaxed visa and travel restrictions to permit certain categories of foreign nationals to come to India. The Centre also announced the launch of SWADES (Skilled Workers Arrival Database for Employment Support) initiative to conduct a skill mapping exercise for returning citizens under the Vande Bharat Mission.
By Chitranjan Kumar