The work relating to bankruptcy and insolvency has been taken out from the domain of Finance Ministry and given to Corporate Affairs Ministry.
The administration of insolvency and bankruptcy code, which was until now handled by the Department of Economic Affairs under the Finance Ministry, will now be under Ministry of Corporate Affairs, according to an order by Cabinet Secretariat.
President Pranab Mukherjee had recently approved necessary changes in Government of India (Allocation of Business) Rules, 1961, which governs working of the central government departments, in this regard, it said.
Since December last year, the work related to legislation on bankruptcy and insolvency was under the Economic Affairs department. Before that, it was being looked after the Legislative Department.
The President had in May given assent to 'The Insolvency and Bankruptcy Code, 2016'. A bill in this regard was passed by Rajya Sabha on May 11. Lok Sabha had given its nod to it on March 5.
As per the new law, insolvency resolutions of companies and individuals will be completed within 180 days. Insolvency is a situation where an individual or a company is unable to repay outstanding debt.
The legislation has a provision for imposition by appropriate authority a minimum penalty of Rs one lakh and extendable up to Rs one crore on "any person initiating the insolvency resolution process or liquidation proceedings fraudulently or with malicious intent".
The Finance Ministry had termed the bankruptcy code as the "biggest economic reform" that will also promote jobs, availability of credit and ensure timely resolution of financial distress of companies.
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