It is a good thing the RBI and the banks have started identifying big loan defaulters, to resolve these bad loans. True, the new bankruptcy code offers a finite window for the resolution of bad loans, far swifter than under the erstwhile Board for Industrial and Financial Reconstruction.
However, it would be naïve to expect solutions overnight. Under the code, an insolvency petition can be filed after a single default without giving any notice, and within 180 days, lenders and borrowers have to find a way to revive the company, failing which the process for auctioning of assets begins.
A quicker way is for the banks to sell their bad loans to asset reconstruction companies (ARCs), who could then undertake the tedious task of resolving …
Read the full article at: http://blogs.economictimes.indiatimes.com/et-editorials/bankruptcy-code-no-magic-wand/
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