Now Reading: Parliament panel backs IBC steps, seeks action on fund diversion
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Parliament panel backs IBC steps, seeks action on fund diversion
A Parliamentary Standing Committee on Finance has backed government steps to strengthen recovery under the Insolvency and Bankruptcy Code (IBC), but has called for urgent action against fund diversion. The committee noted…
The Story in Brief
A Parliamentary Standing Committee on Finance has backed government steps to strengthen recovery under the Insolvency and Bankruptcy Code (IBC), but has called for urgent action against fund diversion. The committee noted that 1,326 avoidance transaction applications valued at Rs 3.76 lakh crore yielded only about Rs 7,500 crore in recovery, exposing a serious drain on assets meant for lenders.
The panel wants the Ministry of Corporate Affairs and the Insolvency and Bankruptcy Board of India (IBBI) to give Resolution Professionals greater powers to investigate diversions and expedite claw-backs. Average resolution time has risen to 853 days against the mandated 330 days, with 30,600 cases pending before 30 NCLT benches. The government cited steps such as a November 2025 IBBI circular on restitution of assets attached under the Prevention of Money Laundering Act.
The Indian Opinion
The gap between Rs 3.76 lakh crore in flagged avoidance transactions and a paltry Rs 7,500 crore recovery is too wide to brush aside. Some will blame the IBC itself, but the law is only as strong as its enforcement. The real test is whether Resolution Professionals get the deeper investigative powers the panel wants, and whether NCLT benches clear cases faster than the current 853-day average. Will the promised regulations actually close the loophole, or will diversion remain the easy escape route?
Source: economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
