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The Insolvency and Bankruptcy Code (IBC), enacted in 2016, provides a unified and time-bound framework for resolving insolvency.
The Code applies to various corporate entities in India, including Public Sector Undertakings (PSUs).
Its application to PSUs aims to improve corporate governance, ensure accountability, and streamline the resolution of financially distressed state-owned enterprises.
The Insolvency and Bankruptcy Board of India (IBBI) is the key regulatory body overseeing the implementation of IBC.
The IBC is a landmark legislation in India that provides a comprehensive legal framework for resolving insolvency and bankruptcy. It aims to maximize the value of assets of distressed entities, promote entrepreneurship, ensure availability of credit, and balance the interests of all stakeholders. The process typically involves a Corporate Insolvency Resolution Process (CIRP) managed by an Insolvency Professional, overseen by the National Company Law Tribunal (NCLT).
Simple Analogy: Think of IBC as a structured emergency room for financially sick companies. Instead of letting them slowly die or linger in debt, it provides a clear, time-bound process to either revive them (resolution) or, if that's not possible, liquidate their assets fairly to pay off creditors (bankruptcy).
This Code is the primary legislation governing insolvency and bankruptcy proceedings in India. It replaced multiple existing laws and established a unified framework for resolution.
It is the regulator for insolvency professionals, insolvency professional agencies, and information utilities under the IBC. It specifies the standards for the efficient transaction of insolvency and bankruptcy proceedings.
The NCLT is the adjudicating authority for corporate insolvency resolution processes under the IBC. It hears petitions, approves resolution plans, and oversees the entire process.
IBC promotes better governance by holding management and boards accountable for financial health, even in PSUs.
A strong insolvency framework improves India's ranking in global 'Ease of Doing Business' reports by providing a clear mechanism for resolving business failures.
IBC is a key tool for banks and financial institutions to recover dues from defaulting companies, thereby helping to resolve the NPA crisis.
The ability to resolve insolvency in PSUs can make them more attractive for disinvestment or privatization by providing clarity on their financial liabilities and future prospects.
GS Paper 3: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment; Government Budgeting; Investment models. Also relevant for Governance.
General Awareness: Indian Economy, Current Affairs.
General Awareness: Indian Financial System, Economic & Financial News, Banking Awareness.
General Awareness: Indian Economy, Current Affairs.
General Knowledge: Economy, Current Events.
Which one of the following is a purpose of 'UDAY', a scheme of the Government?
Answer: Providing for financial turnaround and revival of power distribution companies
With reference to 'Stand Up India Scheme', which of the following statements is/are correct? 1. Its purpose is to promote entrepreneurship among SC/ST and women entrepreneurs. 2. It provides for refinance through SIDBI. Select the correct answer using the code given below.
Answer: Both 1 and 2
Pradhan Mantri MUDRA Yojana is aimed at
Answer: bringing the small entrepreneurs into formal financial system
High for UPSC and Banking exams, Medium for SSC and other general awareness exams.
The process under IBC for resolving insolvency of corporate debtors.
A licensed professional who manages the insolvency process.
A plan proposed by a resolution applicant for the insolvency resolution of the corporate debtor.
The adjudicating authority for corporate insolvency matters.