Key modifications to the Insolvency and Bankruptcy Code (IBC) to ratify the so-called "pre-Packaged" resolution plan for MSMEs and changes to banking legislation to facilitate privatisation are on the economic agenda for Parliament's monsoon session, which runs from 19 July to 13 August. The government will also seek Parliament's approval for the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, which will provide depositors with time-bound access to their insured sum of Rs. 5 lakh if banks fail. It will also draught legislation to de-license the electricity distribution industry and enable any company to operate distribution companies (discoms) anywhere in the country to promote competition.
In early April, the government modified the IBC with an Ordinance to implement the pre-pack resolution plan for MSMEs, under which only the debtor would be able to initiate its own bankruptcy procedure. Analysts believe that the new method might result in a far speedier resolution than the current corporate insolvency resolution procedure (CIRP) and save money. Also, unlike in the CIRP, promoters would continue to manage the MSMEs, whilst the resolution expert will handle the affairs with direction from financial creditors. It would also aid thousands of MSMEs attempting to cope with the damage wreaked by the Covid-19 epidemic by reducing litigation, which is frequently prompted by defaulting founders seeking to preserve control of their businesses. Even though relevant Bills are not included in the original list of 17 Bills for discussion and passage during the session, the administration intends to alter or abolish the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980. (Nationalisation Acts). According to reports, the voting rights cap of 10% for a non-government shareholder, regardless of shareholding, is a barrier to the privatisation of public sector banks. Finance Minister Nirmala Sitharaman revealed the government's proposal to privatise two public sector banks and one general insurance business in the current fiscal year in her Budget FY22 address. It has been rumoured that the Central Bank of India and Indian Overseas Bank (IOB) will be privatised this year, following Niti Aayog's recommendations, although no formal word has been issued. According to sources, the provision in the Banking Regulation Act of 1949 that no shareholder of a banking business – PSB or private sector bank – can exercise more than 26 percent voting rights is also being examined. Changes to nationalisation Acts and the Banking Regulation Act are expected to be part of a wider process to privatise additional PSBs in the future, following the government's designation of banking as a key industry. According to the strategy, the government must reduce the number of PSBs from 12 to a maximum of 4 in the future. Following the government's identification of banking as a vital industry, changes to nationalisation Acts and the Banking Regulation Act are likely to be part of a broader process to privatise additional PSBs in the future. The strategy calls on the government to limit the number of PSBs from 12 to a maximum of 4 in the future. The action will provide some comfort to individuals who have been affected by the serious fraud at Punjab and Maharashtra Co-operative Bank and Yes Bank clients who have had difficulty withdrawing their funds. In exchange for wheeling costs established by state electricity regulators, incumbent state-run discoms will be required to “provide non-discriminatory access to its distribution system to any discoms registered within the same region of supply.” The Coal Bearing Areas (Acquisition and Development) Amendment Bill, 2021, would allow private sector firms to acquire land for commercial coal mining.
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