New Delhi–The proposed Bankruptcy and Insolvency Code has been cleared by a joint parliamentary standing committee and is likely to be discussed in the current budget session, Finance Minister Arun Jaitley said on Wednesday.

This is among various steps the government is taking to deal with the problem of mounting bad loans of state-run banks, he told a meeting of a parliamentary committee attached to the finance ministry.

Jaitley-USThe committee took stock of the non-performing assets or bad loans of public sector banks, a finance ministry statement said.

Making opening remarks, Jaitley said there are two categories of defaulters — those unable to pay back due to economic slowdown and those who were wilful defaulters, including loans sanctioned without due diligence by the banks.

The government has taken various measures to deal with both these categories, the statement added.

The Insolvency and Bankruptcy Bill, 2015, proposes to enact a single bankruptcy code and set deadlines for processing insolvency cases.

The proposed law aims to reduce delays in the resolution of insolvency cases and improve recoveries of money lent to companies.

The draft bill has proposed a timeline of 180 days, extendable by 90 more days, to resolve bankruptcy cases.

Declaring financial sector reforms as one of the “nine pillars” of the 2016-17 budget, Jaitley said in February that the government would bring in a comprehensive bankruptcy code.

“A systemic vacuum exists with regard to bankruptcy situations in financial firms. A comprehensive Code on the Resolution of Financial Firms will be introduced as a bill in parliament during 2016-17,” Jaitley said while presenting the current fiscal’s budget in parliament.

The code will provide specialised resolution mechanism to deal with bankruptcy situations in banks, insurance companies and financial sector entities.

The code, together with the Insolvency and Bankruptcy Code of 2015, when enacted, will provide a comprehensive resolution mechanism for our economy, he added.