Draft bankruptcy law on anvil

The government is in the process of preparing a draft bankruptcy law, a legislation that would overhaul dated rules governing the liquidation or revival of companies in India, and it should be ready in the next ten days, a senior government official said.

The new legislation is being based on the report of an experts panel appointed by the government, which has recommended an overhaul of the country's outdated and cumbersome bankruptcy process, which normally takes several years and costs investors and taxpayers crores of rupees.

The changes would streamline laws governing the liquidation or revival of companies in India, replacing a plethora of competing laws and deficient regulations that leave bankruptcy cases languish for years.

"It's a work in progress. The drafting of the law and recommendations of the committee which has been constituted by the government to give its recommendations on the bankruptcy law and also the committee is preparing the draft legislation," Economic Affairs Secretary Shaktikanta Das said at an event in Mumbai.

The government is likely to be ready with the draft bankruptcy law in the next ten days and the recommendation and the first cut of the draft legislation "should be available to us" in about a week and 10 days time, he said.

"This is one area because we did not have a strong bankruptcy law. In the ease of doing business in this area we scored very badly," the secretary said, adding, "once we are able to bring in bankruptcy law our ranking in world bank ranking will be jumping several spots".

Finance minister Arun Jaitley had, in his Budget speech, said the government had identified bankruptcy law reform which would bring about legal certainty and speed, as a key priority for improving the ease of doing business.

Das also said the Reserve Bank has already set in motion a process for liberalisation of the external commercial borrowing (ECB) regime by putting out a discussion paper in the public domain.

"Comments have come in. RBI is examining it and in about a week's time or about 10 days time we will receive it we will go through it...hopefully with everything going all right, I think before the end of November the liberalisation measure relating to ECB would be announced," he added.