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FM Sitharaman says threshold for default under IBC norms raised to Rs 1 crore

This is done to ensure MSMEs are insulated from being dragged to the courts on defaults considering the COVID-19 situation.

May 17, 2020 / 04:38 PM IST

Finance Minister Nirmala Sitharaman on May 17 said the goverment will soon bring an ordinance to increase the minimum threshold to initiate insolvency proceedings to Rs I crore from Rs 1 lakh.

This will help insulate the micro, small and medium enterprises (MSMEs) from being dragged to court under the Insolvency and Bankruptcy Code (IBC).

This was part of the fifth tranche of measures Sitharaman announced to revive the flagging economy.

Sitharaman said the special insolvency resolution framework for SMES under Section 240A of the Code will be soon notified.

Sitharaman said the government has also suspended fresh initiation of insolvency proceedings up to one year keeping in view the coronavirus pandemic .


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Frequently Asked Questions

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A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

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Among other measures, COVID 19-related debt has been exempted from the definition of "default" under the Code for the purpose of triggering insolvency proceedings, Sitharaman said.

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Moneycontrol News
first published: May 17, 2020 11:59 am
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