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6) The Insolvency and Bankruptcy Code Amendment Ordinance, 2018 will cause faster turnaround of MSME sector during insolvency, protect interests of home buyers and streamline various provisions to improve recovery from NPAs. Examine.(250 words)

TopicIndian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

6) The Insolvency and Bankruptcy Code Amendment Ordinance, 2018 will cause faster turnaround of MSME sector during insolvency, protect interests of home buyers and streamline various provisions to improve recovery from NPAs. Examine.(250 words)

Economic times

Indian express

Why this question

The president recently gave his nod to the Insolvency and Bankruptcy Code Amendment Ordinance, 2018.  The ordinance will bring significant reforms in home buying, MSME sector and resolve other issues hampering NPA resolution in India. The question is related to GS 3 syllabus under the following heading –

Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

Key demand of the question

The question wants us to support with reasons/ facts/ arguments as to how the Insolvency and Bankruptcy Code Amendment Ordinance, 2018 will cause faster turnaround of MSME sector during insolvency, protect interests of home buyers and streamline various provisions to improve recovery from NPAs.

Directive word

Examine- we have to discuss the provisions of the Insolvency and Bankruptcy Code Amendment Ordinance, 2018 and discuss the reforms proposed by it for MSME sector, home buyers and for general NPA resolution.

Structure of the answer

Introduction- mention that the Insolvency and Bankruptcy Code, 2016 (IBC) is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.

Body-

Discuss in points, the provisions of The Insolvency and Bankruptcy Code, Amendment Ordinance, 2018 and describe how they will benefit home buyers, MSME sector and what are the other reforms proposed to solve the problem of NPAs.

e.g giving representation to home buyers in the committee of creditors; no disqualification for the promoter of an MSME firm from bidding for his enterprise undergoing corporate insolvency resolution process (CIRP), provided he is not a wilful defaulter and does not attract other disqualifications not related to default; The voting threshold for all major decisions has been brought down to 66% from earlier level of 75% to encourage resolution as against liquidation etc.

Conclusion- mention that although the ordinance is a progressive step, still there are certain deficiencies e.g home buyers have not been classified into secured or unsecured creditors etc.