• Financial & Insolvency Law

    RBI’s Draft Enabling Framework for Regulatory Sandbox: A Step Forward in Innovation

    Amidst much speculations in the FinTech sector, the Reserve Bank of India (“RBI”) released the Draft Enabling Framework for Regulatory Sandbox, 2019 (“Draft Framework”) on 18th April 2019 aimed at enhancing financial inclusion and innovation in the Indian financial sector, especially for FinTech start-ups. This article seeks to discuss various important clauses of the Draft Framework and examine them in light of the objectives sought to be achieved by it and thereafter, suggest some changes.   [Mansi Mishra is a student of second year B.A. LL.B. (Hons.) at the National Law Institute University, Bhopal]   About the Draft Framework The object behind the Draft Framework is to set up Regulatory Sandbox (“RS”)…

  • Financial & Insolvency Law

    Information Symmetry under the Insolvency and Bankruptcy Code, 2016

    The modus operendi to achieve an optimum insolvency regime is to critically analyse the performance of the legislation on the basis of the effects it has on the overall business and credit market. Thus critiquing its efficiency is an important element of any codified law in a country. This need is even more imperative not only because of the number of applications under the Insolvency and Bankruptcy Code, 2016 (“Code”) but because of the increasing use of this new mechanism to achieve the enforcement of debt obligations and reorganization outside the formal process under the Code, as an arm twisting means, making it more onerous to investigate its effectiveness and efficiency.…

  • Financial & Insolvency Law

    Rights of Employees and Workmen under IBC: Road to Recovery?

    The Insolvency and Bankruptcy Code, 2016 (“Code”) has been enacted with an objective of consolidating and amending the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner. It aims at maximisation of value of assets of such corporate persons, partnership firms and individuals, promoting entrepreneurship, ensuring availability of credit and balancing the interests of all stakeholders. The author, in this articles, aims to cover the provisions related to the rights of employees under the Code to recover their unpaid wages and salaries from the Corporate Debtor and bring out a picture about how such provisions act as a boon for them. [Dulung Sengupta…

  • Financial & Insolvency Law

    SC Strikes Down RBI’s Feb 12 Insolvency Circular: Demystifying the Decision

    A bench of the Hon’ble Supreme court of India comprising of Justices R. F. Nariman and Vineet Saran, in the case of Dharani Sugars and Chemicals Ltd. v. Union of India (“Dharani”) have invalidated the Reserve Bank of India’s (“RBI”) Circular titled ‘Resolution of Stressed Assets – Revised Framework’  (issued on 12.02.2018) (“Feb 12 Circular”) as being ultra vires the Banking Regulation Act, 1885 (“BR Act”) and the Reserve Bank of India Act, 1934 (“RBI Act”). This Circular had overhauled the Indian regime of stressed asset resolution and introduced the generic scheme of a resolution plan to be implemented within 180 days from the date of the default on the loan. Furthermore, where the…

  • Financial & Insolvency Law

    Successful Bidder, Failed Resolution: Analyzing the Lacuna in the Insolvency and Bankruptcy Code, 2016

    The Insolvency and Bankruptcy Code, 2016 (“Code”) has arguably been one of the foremost developments in the Indian financial laws in recent times. While the Code has proven to be (or made to be) contentious in what seems to be almost every aspect of its substance and procedure, a new facet has been added to the realm of concerns under the new insolvency regime. In 2018, having reneged on its obligations under approved resolution plans for Amtek Auto Ltd and Adhunik Metaliks Ltd, Liberty house, the successful bidder or the supposed knight in shining armour for these insolvent firms has opened up the proverbial Pandora’s box of shortcomings and indecisions under…

  • Financial & Insolvency Law

    Bombay HC: Criminal Proceedings not Precluded by Moratorium Under IBC

    The Hon’ble High Court of Bombay in the case of Tayal Cotton (Pvt.) Ltd. Vs. State of Maharashtra has held that the moratorium stipulated under Section 14 of the Insolvency and Bankruptcy Code, 2016 (“Code”) does not bar the initiation or continuance of any criminal proceedings against the Corporate Debtor. This Article seeks to analyze the decision and set out the reasoning of the Hon’ble Court behind the same.   Moratorium Order Explained Under the Code, where an application for the initiation of Corporate Insolvency Resolution Process (“CIRP”) is admitted by the NCLT, a moratorium order is affected with regard to the Corporate Debtor under Section 13 of the Code. Moreover, under Section…

  • Financial & Insolvency Law

    RBI Overhauls its NPA Regime: IBC to Hold the Fort? [Part V: The Impact and Criticism of RBI’s New NPA Regime]

    The Impact The Notification has not done away with the conciliatory means to be employed by the lenders to course correct the stressed account upon default, it has only been rebranded in the wide ambit of a ‘Resolution Plan’ which encompasses, in essence, all of the tools under the previous regime[1]. The major change in the regime however is the stipulation of pursuing the debt in default under the Insolvency and Bankruptcy Code, 2016, where there is failure in the implementation of the Resolution Plan. The notification is only an exercise in the implementation of the statutory power that has been bestowed upon the RBI[2]. The Notification makes the RBI’s…

  • Financial & Insolvency Law

    RBI Overhauls its NPA Regime: IBC to Hold the Fort? [Part IV: Understanding RBI’s New NPA Regime]

    In the past, banks have played both victim and perpetrator under the scheme of the Joint Lenders Forum while they plead for more power to be vested them the in the forum, at the same time, the bank executives are the ones that have led the mismanagement of the accounts and have also engaged in underhanded deals that empower the creation and sustenance of the substantial NPAs as was revealed in the midst of various scandals like the Videocon[1], Nirav Modi[2], Mehul Choksi[3]and Vijay Mallaya[4]scandals, that have been the cause of great national embarrassment and financial loss. RBI vide its Notification dated 12thFebruary 2018 had set a deadline of 27thAugust,…

  • Financial & Insolvency Law

    RBI Overhauls its NPA Regime: IBC to Hold the Fort? [Part III: RBI’s First Attempt at an IBC backed NPA Resolution Framework and the 12 Mega-Defaulters]

    With the enactment of the Banking Regulation (Amendment) Act, 2017, RBI has been vested with the power to direct banks to initiate Corporate Insolvency Resolution Process against any borrower who has defaulted on any payment under §§ 35AA and 35AB of the BR Act. The Provisions are reproduced here-under: [Part II of this series can be found here] “35AA. The Central Government may, by order, authorise the Reserve Bank to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016. 35AB. (1) Without prejudice to the provisions of section 35A, the Reserve…

  • Financial & Insolvency Law

    RBI Overhauls its NPA Regime: IBC to Hold the Fort? [Part II: RBI’s Outgoing NPA Regime]

    RBI has played an active role in combatting the growing NPAs that have plagued the nation. Before assessing the contours of the new regime, it is necessary to understand the former. Some of the tools employed under RBI’s erstwhile regime are as follows: [Part I of this series can be found here] Joint Lender’s Forum: The Joint Lender’s Forum is a dedicated grouping of lender banks that is formed to speed up decisions when an asset (loan) of Rs 100 crore or more turns out to be a stressed asset. RBI has issued guidelines for the formation of JLF in 2014 for the effective management of stressed assets[1]. The JLF has…

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