Nagpur: The Insolvency and Bankruptcy Code (IBC), introduced in 2016, has led to only minimal recovery of banks’ dues. “Trade unions in banks do not find it as an effective measure, rather it indirectly aids the defaulting borrowers,” said Dinesh Lallan Jha, president of the Federation of Unions of Bank of India (BoI).
Under the insolvency code, both the promoter of a defaulter company or the creditors can file a petition at the national company law tribunal (NCLT). A professional is appointed to come up with a revival plan within 270 days or else the company is liquidated.
Lallan, who was in the city to attend a meeting of the federation, said, “Orders have been spelt out in 4 to 5 cases so far. This has led to recovery of not more than 20% of the total dues. What about the remaining amount.”
The amounts were not big in these cases. One can get a clearer picture after some more orders involving bigger amounts are issued. However, the entire system appears to be only helping the defaulters, he said.
Lallan said the bank unions are also opposing the financial resolution and deposit insurance (FDRI) Bill. The proposed law will not only lift RBI’s control over the banks but also hamper depositors’ interest.
The law proposes to increase the insurance cover on deposits. “At present, deposits up to Rs1 lakh are covered under the deposit insurance and credit guarantee scheme (DICGC). The bill does not specify the increased amount but there is an intention to increase the limit. However, the banks’ responsibility towards the depositor is lifted once it goes into liquidation. This can leave the depositors in the lurch,” he said.
