The cabinet approved a proposal to amend the Insolvency & Bankruptcy Code (IBC) to prevent companies from being forced into resolution proceedings due to loan defaults triggered by the Covid-19 crisis. An ordinance will be issued soon to empower the government to exclude Covid-19-related debt from the definition of “default” under the code for the purpose of triggering insolvency proceedings. The cut-off for such debt could be from March 25, when the lockdown was imposed, to a date to be notified later, said people with knowledge of the matter.
The cabinet also approved the constitution of an empowered group of secretaries, to be chaired by the cabinet secretary, to facilitate investment flows into the country as companies look to relocate operations from China to India. It also okayed two ordinances that aim to transform agriculture with more private investment and higher income for farmers. “It (IBC ordinance) was taken up by the cabinet,” a government official said, adding that details would be announced once the executive order was issued. Finance minister Nirmala Sitharaman had said on May 17 that the government will amend the IBC.