The Insolvency and Bankruptcy Code (IBC) provides for a time-bound and market-linked resolution of stressed assets.
The Finance Ministry has asked public sector banks to monitor cases where insolvency proceedings could be initiated against individuals who are guarantors of corporate debtors that have defaulted on loans.The Insolvency and Bankruptcy Code (IBC) provides for a time-bound and market-linked resolution of stressed assets. The Code also provides for initiation of insolvency proceedings against personal guarantors of corporate debtors, even though the provision has not been used much by lenders to recover dues.In an advisory, the Department of Financial Services has asked Public Sector Banks (PSBs) to consider putting in place a mechanism for monitoring the cases which may require initiation of individual insolvency process before the National Company Law Tribunal (NCLT) against personal guarantors to corporate debtors.“Banks may also consider setting up IT system to collate data regarding personal guarantors to corporate debtors in all such cases for the requisite follow up and consequential action,” the advisory issued on August 26 said.The rule governing initiation of insolvency process against the personal guarantor to corporate borrowers came into effect from December last year. It empowers creditors to file insolvency applications against personal guarantors to corporate debtors under the IBC.Under the IBC, individuals are classified into three classes — personal guarantors to corporate debtors, partnership firms and proprietorship firms, and other individuals.There are cases when a corporate debtor takes a loan guaranteed by another corporate person (corporate guarantor to the corporate debtor) or an individual (personal guarantor to the corporate debtor). In case of a default, the lender may pursue a remedy against the guarantor or the corporate debtor.
You have reached your limit for free articles this month.
To get full access, please subscribe.
Already have an account ? Sign in
Show Less Plan
Subscription Benefits Include
Today’s Paper
Find mobile-friendly version of articles from the day’s newspaper in one easy-to-read list.
Faster pages
Move smoothly between articles as our pages load instantly.
Unlimited Access
Enjoy reading as many articles as you wish without any limitations.
Dashboard
A one-stop-shop for seeing the latest updates, and managing your preferences.
Personalised recommendations
A select list of articles that match your interests and tastes.
Briefing
We brief you on the latest and most important developments, three times a day.
*Our Digital Subscription plans do not currently include the e-paper ,crossword, iPhone, iPad mobile applications and print. Our plans enhance your reading experience.
A letter from the Editor
Dear subscriber,Thank you!Your support for our journalism is invaluable. It’s a support for truth and fairness in journalism. It has helped us keep apace with events and happenings.The Hindu has always stood for journalism that is in the public interest. At this difficult time, it becomes even more important that we have access to information that has a bearing on our health and well-being, our lives, and livelihoods. As a subscriber, you are not only a beneficiary of our work but also its enabler.We also reiterate here the promise that our team of reporters, copy editors, fact-checkers, designers, and photographers will deliver quality journalism that stays away from vested interest and political propaganda.Suresh Nambath