More Than 2,100 Companies Clear Bank Dues Worth Rs 83,000 Crore

News World India | 0
| May 23 , 2018 , 11:15 IST

More than 2,100 companies who had defaulted on repayment of loans to banks have, over the fear of losing control of their companies, settled their dues worth a total of around Rs 83,000 crore before action could be initiated under the newly-enacted Insolvency and Bankruptcy Code (IBC).

According to a report by TOI, data compiled by the Ministry of Corporate Affairs (MCA) indicated that more than 2,100 companies have cleared the outstanding amounts, with a majority of the companies making the payments after the government's amendment to the ICB.

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The recent IBC amendment explicitly bars promoters of companies classified as non-performing assets (NPAs) from bidding for those companies that have had action initiated by the National Company Law Tribunal or the bankruptcy court. However, as per a clause, promoters can participate in resolution processes once they cleared their respective dues.

The amendment faced severe criticism from the corporate sector as it would lock out top names of the industry such as Ruias of Essar, Singals of Bhushan Group and Gaurs of Jaiprakash Group from the resolution process. By barring top names in the industry from the resolution process, there were fears that the bids may not get aggressive, as a result of which the lenders would recover a lesser amount.

To counter the criticism, the government argued that the move was meant to ensure that the promoters did not walk away with the same asset at a heavy discount.

“The real success is the pressure on loan defaulters to clear dues. The borrowing and lending culture is changing because of IBC,” a source said anonymously.