Washington– The Insolvency and Bankruptcy Code, passed by parliament on Wednesday, will improve the ease of doing business in India for both domestic and global investors, the US-India Business Council (USIBC) said in a statement here.

“The Bill is another feather in the cap of the government’s drive to improve the ease of doing business for both domestic and global investors,” said council president Mukesh Aghi.

Mukesh Aghi
Mukesh Aghi

“The passage of this Bill will establish an entrepreneur-friendly legal bankruptcy framework for speedy, efficient and consistent resolution of insolvencies for companies and individuals,” he said.

The USIBC will welcome Prime Minister Narendra Modi as the guest of honour for its 41st Annual Leadership Summit here on June 7 at the gathering of senior Indian and American leaders from the public and private sectors, the statement added.

The Rajya Sabha on Wednesday gave its approval to the Insolvency and Bankruptcy Code, 2015, following its passage through the Lok Sabha last week.

The Insolvency Bill proposes to enact a single bankruptcy code and set deadlines for processing insolvency cases, thereby cutting down the time it takes to wind up a company or recover dues from a defaulter. It has proposed a timeline of 180 days, extendable by 90 more days, to resolve bankruptcy cases.

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

The code is quite a positive reform for India’s financial sector, especially for state-run banks heavily burdened with stressed assets, as it will give creditors a legal path for recovering their dues in a time-bound way, Japanese financial services firm Nomura said in a report last week.