Fearing action under the newly-enacted Insolvency and Bankruptcy Code (IBC), over 2,100 companies, who had defaulted on loan repayments, have settled their dues of around Rs 83,000 crore, Times of India has reported.
A majority of the outstanding amount was cleared after the government amended the code to prevent promoters of companies that were classified as non-performing assets (NPAs) from bidding for these companies and regaining control.
The amendment helped the government to bar promoters from re-purchasing their stressed assets at a discounted price after action was initiated by the bankruptcy court, the National Company Law Tribunal (NCLT).
As a result, top industry names such as Ruias of Essar, Singals of Bhushan Group and Gaurs of Jaiprakash Group, were left ineligible to bid.
Earlier this week, the acquisition of Bhushan Stee by Tata under the IBC framework led to the reduction in bad loans by around Rs 35,000 crore. NCLT has also initiated insolvency proceedings against Anil Ambani-led Reliance Communications.
“The real success is the pressure on defaulters to clear dues. Borrowing and lending culture is changing because of IBC,” the daily quoted an official as saying.
The government is considering more amendments to make the code robust.