The Rajya Sabha on Saturday passed the Insolvency and Bankruptcy Code (2nd amendment) Bill, 2020 even as a opposition member took a jibe at Union Finance Minister Nirmala Sitharaman’s ‘act of God’ statement vis-a-vis the coronavirus pandemic’s effect on the economy.
The Bill seeks to replace the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020, which was promulgated on June 5 to prohibit initiation of insolvency proceedings for defaults arising during the six months from March 25 that is extendable up to one year.
Sitharaman strongly defended the proposed amendment and addressed individual concerns of the Rajya Sabha MPs, including those who were extremely critical of the government move.
“The situation before us in March was clearly about putting lives before livelihood. When the PM announced the Janata Curfew, he said it was a preventive remedy and did not know how long it will last. Naturally, the lockdown impacted businesses and financial market. But did we just sit and watch? No,” Sitharaman said in a prelude to why the government brought forth various ordinances in the first place.
But Communist Party of India’s Binoy Viswam hit out at Sitharaman for her “act of God’ comment in the recent past. “The Indian economy is in bad shape. She is saying these are all acts of God. Don’t accuse God; God is not the culprit,” he remarked.
Sitharaman meanwhile elaborated that the suspension of Sections 7, 9 and 10 of the IBC took place to prevent businesses from getting pushed into insolvency.
She highlighted how the IBC had served its purpose as far as the NPAs of scheduled commercial banks were concerned. “The priority is to keep the companies going rather than liquidate them,” she said .
While discussing the Bill, BJP MP Arun Singh defended it while taking a dig at the Congress, but without naming it, during a mention of the NPAs.
He maintained that the bank NPAs have since come down, calling the amendment Bill a remarkable and bold step.
The BJP MP also reeled out statistics, including on ease of doing business ranking, to make his point about the success of the Bill.
Congress member Vivek Tankha said that the enactment of Section 10 will be counterproductive. He added that there was no certainty as to how long the coronavirus pandemic would continue. He claimed that small traders would be affected while the government was trying to protect big corporates.
Nationalist Congress Party’s Praful Patel said that his party supported the amendments since the government’s goal was temporary and that there might be more amendments required in the future. He also urged the government to “hand-hold” a few businesses.
Amar Patnaik of the Biju Janata Dal asked since the IBC had been fairly successful since 2016, what was the need for the three ordinances. CPI-M’s KK Ragesh said that since the ordinance prohibited insolvency proceedings for a year it would push the banking sector to a crisis.
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