The government is mulling a special window for resolution of stressed non-banking finance companies (NBFCs) under the Insolvency and Bankruptcy Code (IBC), a senior government official said. A special window is certainly something which is being examined closely, the official added. The move comes against the backdrop of financial sector players like Dewan Housing Finance Corporation Ltd (DHFL) facing troubles. Punjab and Maharashtra Co-operative (PMC) Bank is also grappling with financial woes.
he effort is to come out with some mechanism to deal with financial service providers which require some resolution under an alternative framework pending the Financial Resolution and Deposit Insurance (FRDI) Bill or some specific provision coming in place, the official said. A notification in this regard will be issued soon, the official added. Currently, the resolution of stressed financial institutions cannot take place under the IBC. According to the official, the government is working out a way to ensure that a new promoter is not liable for the criminal liability of previous management while buying stressed assets through the IBC process.
Source: Money Control
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