Insta
Simpler Insolvency And Bankruptcy Code For SMEs On Way
Swarajya Staff
Jul 17, 2017, 02:20 PM | Updated 02:20 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
The government has started training its sights on extending the insolvency and bankruptcy code to smaller firms, following its crackdown on large corporate loan defaulters.
The Insolvency and Bankruptcy Board of India (IBBI) has started putting together a simpler version of the insolvency and bankruptcy code for partnership and proprietorship firms, the legal form that most small and medium enterprises (SMEs) take.
Why is the government widening the net?
Though the value of loans borrowed by SME is small, they far outnumber companies, exercising a significant influence on the financial sector’s stability.
The government initiative to develop an efficient and low-cost insolvency code for the SME sector is due to its ability to create jobs with low capital and the need for quick redeployment of capital in the event of an enterprise’s failure.
The ministry of micro, small and medium enterprises says the SME sector makes up 33 per cent of India’s manufacturing output. About 36 million such enterprises operate in the country, half of them in rural areas, employing more than 80 million people.
The framework of the SME bankruptcy code is expected to be drawn up by the end of this month.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Introducing ElectionsHQ + 50 Ground Reports Project
The 2024 elections might seem easy to guess, but there are some important questions that shouldn't be missed.
Do freebies still sway voters? Do people prioritise infrastructure when voting? How will Punjab vote?
The answers to these questions provide great insights into where we, as a country, are headed in the years to come.
Swarajya is starting a project with an aim to do 50 solid ground stories and a smart commentary service on WhatsApp, a one-of-a-kind. We'd love your support during this election season.
Click below to contribute.