IIA raises concern over amendment in Insolvency and Bankruptcy Code, 2016

IIA raises concern over amendment in Insolvency and Bankruptcy Code, 2016

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LUCKNOW: The Indian Industries Association (IIA), representing hundreds of micro, small and medium enterprises (MSMEs) of Uttar Pradesh has written a letter to PM Modi, MSME Minister Nitin Gadkari, RBI Governor Shaktkantha Das and SS & DC MSME raising concern over the Insolvency and Bankruptcy Code, 2016.

In the letter, the association said that Insolvency and Bankruptcy Code, 2016 is against the Interest of MSME.

The letter said, “The Finance Ministry has announced the amendment of section 4 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), by which one crore rupees is the minimum amount of default instead of rupees one lakh for filing cases in NCLT. The Finance Ministry has taken the plea that this has been done so that the MSMEs are protected.  This amendment has been very promptly issued [F. No. 30/9/2020-Insolvency) on 24th March, 2020 on the same date of announcement.”

IIA elaborated that amending the minimum monetary limit of default from Rs 1 lakh to Rs 1 Crore and claiming it to have been done to protect MSMEs is abhorring. Fact of the matter is, Corporate and Government entities get protected to the extent the limit has been raised while the MSMEs have lost a strong leverage that could be used to make the powerful ones settle cases of amount due to MSMEs.

“This statement of FM and amendment has taken the MSMEs by surprise as we had never raised the issue. It seems the amendment has been basically done to please the large industries so that MSME cannot file cases in NCLT. MSME now shall have to wait till the debt becomes One Crore instead of One Lakh,” said IIA. 

Source- Knn India.