The Ministry of Corporate Affairs (MCA) is finalising a special insolvency resolution under section 240A of the Insolvency and Bankruptcy Code (IBC), 2016.
"The Ministry of Corporate Affairs is finalising a special insolvency resolution under section 240A of the Code, to provide relief to the MSMEs and the same would be notified soon," a statement released by the Ministry said.
The statement released after Finance Minister Nirmala Sitharaman reviewed progress of the Atmanirbhar Abhiyaan so far, also stated that the threshold of default under Section 4 of the IBC has been raised to Rs 1 crore from existing Rs 1 lakh.
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"In exercise of powers conferred under Section 4 of the IBC, 2016 (31 of 2016), the central government hereby specified Rs 1 crore as the minimum amount of default for the purposes of the said section vide Notification dated June 24, 2020," it read.
Further as per Sitharaman's statement while announcing financial relief during the coronavirus pandemic, the IBC (Amendment) Ordinance, 2020 has been promulgated on June 5, 2020 thereby provided for insertion of Section 10A in the Code to temporarily suspend initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7, 9 and 10 of the Code for a period of six months or such further period, not exceeding one year from such date.
Besides this, the Rs 30,000 crore Special Liquidity Scheme for non-banking financial companies (NBFCs), housing finance companies (HFCs) and micro-finance institutions (MFIs) has been launched after Cabinet approval.
"RBI has also issued a circular to NBFCs and HFCs on July 1, 2020 itself on the Scheme. SBICAP has received 24 applications requesting about Rs. 9,875 crore of financing as on July 7, 2020 which are being processed. The first application in this regard has received its approval and the remaining are also being considered," it said.
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