New Delhi: The Supreme Court’s judgement on the RBI circular does not disturb the rights of creditors to insolvency proceedings and would bring in behavioural changes, making creditors more responsible for their actions and inactions, said M S Sahoo, chie, Insolvency and Bankruptcy Board of India.
On April 2, the apex court quashed a circular issued by the RBI wherein defaulting companies would be referred to the NCLT for insolvency proceedings in case of non-resolution in 180 days from the day of default. This was applicable in cases involving loans worth over Rs 2,000 crore.
Sahoo said the court’s judgement does not disturb rights of creditors to initiate insolvency proceeding or any provision in the Insolvency and Bankruptcy Code (IBC).
“In view of this judgement, a bank-creditor now needs to ask itself when it should initiate the proceeding and justify itself why it is initiating or not initiating the proceeding in case of a defaul. This will bring in behavioural changes among the creditors, making them more responsible for their actions and inactions,” he told PTI.
