New Delhi: The Reserve Bank can now seek resolution of non-banking financial companies having assets worth of at least ₹500 crore under the insolvency law, a move that is likely to help in addressing woes in the NBFC sector. The introduction of the "generic framework" comes against the backdrop of the ongoing liquidity crisis in the non-banking financial companies (NBFCs) that has also sparked concerns about overall stability of the financial sector. Section 227 of the Code enables the central government to notify, in consultation with the financial sector regulators, FSPs or categories of FSPs for the purpose of insolvency and liquidation proceedings. Significantly, the corporate insolvency resolution process for an FSP would be initiated "only on an application by the appropriate regulator". "Whether we will have something equivalent to IBC for financial sector, we will address that in future.

Source: Mint November 18, 2019 14:03 UTC