The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002(SARFAESI Act 2002) provide for Enforcement of Security Interest for the realization of the dues without the intervention of Courts or Tribunals for recovery of NPAs by banks under various laws. In 2016 NBFC is included under the definition of the financial institution through…
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), is a landmark legislation enacted to empower banks and financial institutions with the ability to recover non-performing assets (NPAs) without the need for court intervention. The Act was later amended by the Enforcement of Security Interest and Recovery of…
(This article explains the definition of non-performing assets (NPAs), classification of assets, Income recognition, and provisioning requirement under prudential norms for all types of accounts including NPA norms for Agricultural loans and especially KCC) Asset classification, in the context of financial institutions like banks, involves categorizing loans and advances into different classes based on their…
Introduction The Pre-Packaged Insolvency Resolution Process (PPIRP) is a targeted mechanism introduced under the Insolvency and Bankruptcy Code (IBC) of India to address financial distress in Micro, Small, and Medium Enterprises (MSMEs). Designed to be faster, more economical, and less disruptive than the conventional Corporate Insolvency Resolution Process (CIRP), the PPIRP enables financially stressed MSMEs…
Introduction The enactment of the Insolvency and Bankruptcy Code (IBC), 2016, marked a transformative shift in India’s approach to corporate insolvency and liquidation. The Code replaced the erstwhile debtor-in-possession model with a creditor-in-control framework, introducing a structured, time-bound mechanism for the resolution of financial distress. Its core objectives include facilitating faster resolution, maximizing the value…
Introduction The Insolvency and Bankruptcy Code (IBC) provides a comprehensive legal framework for resolving financial distress faced by individuals and businesses in India. It outlines the processes, principles, and institutions involved in managing insolvency and bankruptcy cases in a time-bound and equitable manner. The Code incorporates several key legal elements including automatic stay, debtor obligations,…
IntroductionInsolvency and bankruptcy are closely related financial concepts, yet they represent distinct aspects of financial distress. Insolvency refers to a financial condition where an individual or entity is unable to meet debt obligations as they fall due. Bankruptcy, on the other hand, is a legal process that is initiated when such financial incapacity becomes unmanageable…
The Insolvency and Bankruptcy Code (IBC), 2016 establishes a consolidated legal framework for the resolution of insolvency and bankruptcy in India. Enacted with the objective of ensuring a time-bound and structured resolution process, the Code applies to various categories of debtors, while expressly excluding certain regulated entities. Applicability of the IBC The Code is applicable…
The Insolvency and Bankruptcy Code (IBC), 2016 provides a comprehensive and time-bound framework for the resolution of stressed assets in India. It marks a paradigm shift from the traditional debtor-in-possession model to a creditor-in-control approach, with the objective of maximizing asset value and fostering stronger credit discipline. The National Company Law Tribunal (NCLT) is designated…
The Reserve Bank of India (RBI) issued comprehensive guidelines to enable the restructuring of advances by banks in response to the financial distress caused by the COVID-19 pandemic. These guidelines allow for a one-time modification of loan terms for eligible borrowers without necessitating a downgrade in asset classification, provided that specific regulatory conditions are met.…