Tag: jayant sinha

Crypto industry urges govt to take nuanced approach, asks investors to remain calm, BFSI News, ET BFSI

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The cryptocurrency industry on Wednesday urged the government to take a nuanced approach towards regulating crypto assets in India and asked investors in the country to remain calm and not arrive at a rushed conclusion, a day after the government listed for introduction a Bill to ban all such cryptocurrencies, with some exceptions.

‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021′, to be introduced in the winter session of Parliament beginning November 29, seeks to “create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses”.

BuyUcoin CEO Shivam Thakral said it expects the Bill to accommodate the aspirations of Indian crypto owners, Indian crypto entrepreneurs, and investors who have put their faith in India’s crypto growth story.

“The crypto Bill should be flexible enough for young blockchain projects to flourish and we strongly believe that there is a strong case for a standard process for new cryptocurrencies before they get listed on any exchange in India for trading.

“I think popular crypto-assets like Bitcoin and Ethereum will be pre-approved by the regulators for getting listed on the exchange. We also request the government to give immediate clarity on the taxation and filing of crypto assets,” Thakral said.

CoinSwitch Kuber founder and CEO Ashish Singhal said the industry has been actively communicating with all stakeholders keeping investor protection at the forefront.

“Our discussions in the last few weeks indicate there is a broad agreement on ensuring that customers are protected, financial system stability is reinforced and India is able to take advantage of the crypto technology revolution…

“As of now, I urge all crypto asset investors in the country to remain calm, do their own research before arriving at a rushed conclusion,” said Singhal, who is also the co-chair of the Blockchain and Crypto Assets Council (BACC).

Cryptocurrency exchange CoinDCX’s spokesperson said a well-assessed and thought-through regulation will pave the way for greater adoption of the technology and will help millions of Indians embrace this new-age asset class.

OKEx.com CEO Jay Hao said India is home to the highest number of crypto owners in the world and the onus lies on the government to protect the interest of a large number of crypto investors in the country.

“We urge the government to take a nuanced approach towards regulating crypto assets in India. With the positive outcome of the cryptocurrency Bill, India will embark on an exciting journey of becoming the global leader in crypto, Defi, and NFTs,” Hao said.

Currently, there is no regulation or any ban on the use of cryptocurrencies in the country. Against this backdrop, Prime Minister Narendra Modi earlier this month held a meeting on the cryptocurrencies with senior officials, and indications are that strong regulatory steps could be taken to deal with the issue.

There has been a rising number of advertisements, featuring even film stars, promising easy and high returns on investments in cryptocurrencies in recent times, amid concerns over such currencies being allegedly used for luring investors with misleading claims.

Last week, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met the representatives of crypto exchanges and BACC, among others, and arrived at a conclusion that cryptocurrencies should not be banned, but it should be regulated.

The RBI has repeatedly reiterated its strong views against cryptocurrencies saying they pose serious threats to the macroeconomic and financial stability of the country and also doubted the number of investors trading on them as well as their claimed market value.

RBI Governor Shaktikanta Das has also reiterated his views against allowing cryptocurrencies saying they are a serious threat to any financial system since they are unregulated by central banks.

The RBI had announced its intent to come out with an official digital currency, in the face of proliferation of cryptocurrencies like Bitcoin about which the central bank has had many concerns.

Private digital currencies/ virtual currencies/ crypto currencies have gained popularity in the past one decade or so. Here, regulators and governments have been sceptical about these currencies and are apprehensive about the associated risks.

On March 4, 2021, the Supreme Court had set aside an RBI circular of April 6, 2018, prohibiting banks and entities regulated by it from providing services in relation to virtual currencies.



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GN Bajpai-led panel wants IBBI to set up dashboard for insolvency data, BFSI News, ET BFSI

Banking & Finance

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Former Sebi chairman G N Bajpai-led working group has suggested designing a national dashboard for insolvency data, saying ”reliable real-time data” is essential to assess the performance of the insolvency process under the IBC.

The panel also said the IBBI has made commendable efforts in publishing quarterly data on the insolvency resolution process in detail. The data published by the Insolvency and Bankruptcy Board of India (IBBI), a key institution in implementing the Code, include those on insolvency filings, recovery amount and duration of the insolvency process across corporate debtors for all creditors. In its report, the group said that cross-validation of data sourced from multiple data banks is a challenge in making credible assessments.

The Insolvency and Bankruptcy Code (IBC), which provides for a time-bound and market-linked resolution of stressed assets, has been in force for more than five years now.

The objectives

The six-member group said in a report that resolution of the distressed asset remains the first objective of the Insolvency and Bankruptcy Code (IBC), followed by promotion of entrepreneurship, availability of credit and balancing the interests of stakeholders. “This order of objectives is sacrosanct,”
it said.

The working group on tracking outcomes under the Code has suggested a framework based on ‘Effectiveness, Efficiency and Efficacy’ with respect to Corporate Insolvency Resolution Process (CIRP).

Another suggestion is for the IBBI to look at including quantitative data on cost indicators such as court/bankruptcy authority fees, resolution professional’s fees and asset storage and preservation costs in its quarterly updates.

The report noted that data on time, cost and recovery rates will allow a reliable evaluation of the insolvency process with respect to parameters of effectiveness and efficiency.

The indicators

Further, the report said it was important to track the performance of related economic indicators to assess the performance of the insolvency process for other objectives such as ‘promoting entrepreneurship’ or ‘enhancing credit availability.

Such an assessment would measure the performance of the system with respect to the ‘efficacy’ parameter.

”The WG (Working Group) recommends a range of indicators such as the number of new companies registered, credit supply to stressed sectors like real estate, construction, metals etc, change in the cost of capital (particularly for stressed sectors), the status of non-performing loans, employment trends, size of the corporate bond market and investment ratio for the related sectors,” it added.

This is the second report in recent months after a parliamentary standing committee had suggested changes to the code in August.

In August, a 29-member standing committee headed by former minister of state for finance Jayant Sinha, and including former prime minister Manmohan Singh, said that low recovery rates with haircuts as much as 95% and 71% of the cases pending beyond the 180-day time frame envisaged by the law pointed towards a deviation from the original objective of the code.

The key recommendations of the committee include setting up specialised National Company Law Tribunal benches to hear only IBC matters, establishing professional code of conduct for committee of creditors, strengthening the role of resolution professionals and digitalising IBC.



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IBC poised for a new set of changes, weeks after rap by parliamentary panel, BFSI News, ET BFSI

Banking & Finance

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The government is working on a new set of amendments to strengthen the Insolvency and Bankruptcy Code, which has come under criticism after over 90 per cent haircuts suffered by lenders in some hi-profile resolutions.

The amendments are being worked on by the finance ministry and IBBI officials to plug any loopholes in the system, according to a report.

finance and corporate affairs minister Nirmala Sitharaman had given directions to officials at the Financial Stability and Development Council meeting last month to finalise changes that would be required to strengthen the IBC.

A meeting of officials was held on September 21 and 28 over the issue, according to a report.

The Reserve Bank of India and Securities and Investment Board of India wants issues over IBC settled.

Rising haircuts

Almost half of the closed cases by lenders under IBC in FY21 ended in liquidation, according to IBBI, while only 13 per cent were resolved. In most of the cases under IBC, by the time they are resolved, their asset value depreciates leading to 90% haircuts, according to IBBI

In August, the parliamentary standing committee on finance cautioned that the IBC may have strayed from its original objectives, highlighting inordinate delays and large haircuts for lenders.

“Liquidation should not be a benchmark. And that is why we have to think carefully about what should be the benchmarks and a resolution process particularly for secured financial creditors,” Jayant Sinha, chairman of the parliamentary standing committee on Finance had said.

Panel suggestions

Sinha had suggested three steps to reduce litigation.

Firstly, fill the vacancies at NCLT as quickly as possible because then there is more time to adjudicate a case well and come up with a good resolution.

If judges don’t have enough time and rush through cases, they won’t give good judgments, and then things will end up in litigation. Therefore, adding capacity as soon as possible is one way in which we can deal with these endless litigation type issues.

Secondly, improve the quality of NCLT members. The parliamentary committee has recommended that the NCLT should at least have high court judges so that we can benefit from their experience and their wisdom. That’s another way to prevent litigation.

The third way of preventing litigation is to ensure when people submit the resolution plan as per the deadline, they do not have an opportunity to come in with another resolution plan after that. Because not doing so, will again rest in litigation, and a lot of contentions back and forth.

“So these are three very concrete steps that we have suggested to reduce litigation as it is one of the reasons a lot of these timelines are being extended,” he said.



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Bidders may walk away as NCLT delays erode value, tests patience, BFSI News, ET BFSI

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After the one-year suspension, the Insolvency and Bankruptcy Code (IBC) is now dealing with an acute shortage of members, or judges, that is forcing companies into liquidation which could have otherwise been revived.

Nearly 47 per cent or 1,349 cases closed under the insolvency law ended up in liquidation till the end of June this year but the economic value in the majority of the cases had eroded even before the commencement of the corporate insolvency resolution process.

The absence of members, the equivalent of judges, in the National Company Law Tribunal, which deals with both bankruptcy cases as well as those related to Companies Act matters, is showing and threatens to stall the landmark reform.

Bidders who are willing to take over the distressed companies may walk away due to the delays.

Depleted strength

The parliamentary standing committee on finance had noted that there were only 28 members in NCLT as against the sanctioned strength of 62. “The committee is deeply concerned to note that more than 50% of the sanctioned strength of NCLT is lying vacant and that the issue of vacancy has plagued the tribunal for years,” the panel observed, while noting how it had been working without a regular president either.

The report also showed how at the end of May, 71% of the IBC-related cases were pending in the NCLT for over 180 days when the law seeks to ensure that a case is decided within six months. At the end of May, over 40% of the cases filed in the tribunal were pending.

The recommendations for appointments are lying with the government for close to a year.

In contrast, fearing a rush of cases following the pandemic, the US had hired several of its retired judges to ensure that cases were decided quickly.

Parliamentary Committee suggestions

While speaking to ETCFO last month, Jayant Sinha, chairman of the Parliamentary Standing Committee on Finance, had suggested three steps to reduce litigation.

Firstly, fill the vacancies at NCLT as quickly as possible because then there is more time to adjudicate a case well and come up with a good resolution, he had said.

If judges don’t have enough time and rush through cases, they won’t give good judgments, and then things will end up in litigation. Therefore, adding capacity as soon as possible is one way in which we can deal with these endless litigation type issues.

Secondly, improve the quality of NCLT members. The parliamentary committee has recommended that the NCLT should at least have high court judges so that we can benefit from their experience and their wisdom. That’s another way to prevent litigation.

The third way of preventing litigation is to ensure when people submit the resolution plan as per the deadline, they do not have an opportunity to come in with another resolution plan after that. Because not doing so, will again rest in litigation, and a lot of contentions back and forth.

“So these are three very concrete steps that we have suggested to reduce litigation as it is one of the reasons a lot of these timelines are being extended,” he said.



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Jayant Sinha, BFSI News, ET BFSI

Banking & Finance

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As the Indian Bankruptcy Code (IBC), one of the crucial reforms that gives India Inc the ‘right to exit’ and start afresh, completed five years, ETCFO spoke with Jayant Sinha, former union minister and Chairman of the parliamentary standing committee on finance, to know if liquidation is a scam under IBC? And more.

“Liquidation should not be a benchmark. And that is why we have to think carefully about what should be the benchmarks and a resolution process particularly for secured financial creditors,” said Jayant Sinha.

Almost half of the closed cases by lenders under IBC in FY21 ended in liquidation, as per the Insolvency and Bankruptcy Board of India (IBBI), while only 13 per cent were resolved. In most of the cases under IBC, by the time they are resolved, their asset value depreciates leading to 90% haircuts, according to IBBI

Specifically from the secured creditors perspective, when they lend against collateral they expect 100 per cent value back instead of “salvage or the liquidation value”.

“If that was to be the case, the kind of loans a company would be able to get would be very modest, because everybody’s just lending against liquidation value. We can’t have that,” Sinha said, underscoring the importance of having benchmarks.

Liquidation can’t be a benchmark under Insolvency and Bankruptcy Code: Jayant SinhaThese benchmarks are for secured financial creditors as there should be a very high level of confidence that they’re going to get the vast part of their loan back, he said.

But the question is how to decide the benchmark?

Sinha points to global benchmarks, the major economies that we compete with like Germany, Japan, China, the US, the UK. What secured financial creditors typically get through the resolution process should be the benchmark, he said.

Benchmark the quantum of haircut

In one of the recommendations, the parliamentary standing committee in its report titled, ‘Implementation of Insolvency and Bankruptcy Code: Pitfalls and Solutions’ was to benchmark the quantum of haircuts to avoid a 90 per cent haircut situation.

As per IBBI, in the resolved cases, the haircut, or the loss to banks on their claims, rose to 60 per cent in FY 2021, from 55 per cent average in the previous years. While in the March 2021 quarter alone, haircuts rose to a whopping 74 per cent of the claims made by the lenders against the defaulters.

While it is a matter of concern, how will benchmarking haircuts work?

Benchmarking haircut is not a prescription. It’s not a number that you have to meet. But it is something that should guide the committee of creditors in terms of how and how quickly they should go through the resolution process..

He believes that the system needs to gear up to deliver better outcomes. He feels there are many reasons why 40% recovery is happening. He ascribed these low recoveries to companies close to liquidation coming to IBC, processes that dragged on for a long time eventually eroding the value of the assets, apart from other reasons.

“Going forward, 40% cannot be the benchmark. It is not good enough. Whereas 5% is not good enough either. We need to do better for secured financial creditors. And the changes that we are suggesting are in support of all of that,” he said.

Role of NCLT

As far as delays in the process are concerned, one aspect is counter litigation by promoters. This costs money and time to the whole system. How should IBC deal with such issues, especially when NCLT is facing the challenge of capacity?

Sinha suggested three steps to reduce litigation.

Firstly, fill the vacancies at NCLT as quickly as possible because then there is more time to adjudicate a case well and come up with a good resolution.

If judges don’t have enough time and rush through cases, they won’t give good judgments, and then things will end up in litigation. Therefore, adding capacity as soon as possible is one way in which we can deal with these endless litigation type issues.

Liquidation can’t be a benchmark under Insolvency and Bankruptcy Code: Jayant SinhaSecondly, improve the quality of NCLT members. The parliamentary committee has recommended that the NCLT should at least have high court judges so that we can benefit from their experience and their wisdom. That’s another way to prevent litigation.

The third way of preventing litigation is to ensure when people submit the resolution plan as per the deadline, they do not have an opportunity to come in with another resolution plan after that. Because not doing so, will again rest in litigation, and a lot of contentions back and forth.

“So these are three very concrete steps that we have suggested to reduce litigation as it is one of the reasons a lot of these timelines are being extended,” he said.

ALSO READ: RBI Governor and Jayant Sinha to discuss IBC



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RBI Governor and Jayant Sinha to discuss IBC and various issues, BFSI News, ET BFSI

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After five years of its operation, the most famous tool of lenders, the Insolvency and Bankruptcy Code (IBC) will see more amendments. The parliamentary standing committee on finance has recommended many changes in the IBC, including strengthening the NCLT bench, obeying the stipulated time frame, liquidation process, extending the pre-pack to large corporations etc. The committee is also going to meet the Governor of the Reserve Bank of India very soon.

“There’s something very important on our radar, the Governor of the RBI is coming to meet with the committee to discuss RBI’s role and how RBI has been handling its various important responsibilities,” said Jayant Sinha, former union minister, and the chairman of the Parliamentary Standing Committee told ETCFO.

Sinha has been leading the standing committee on issues around Indian Bankruptcy Code (IBC). They have submitted their recommendations to the government in the report titled ‘Implementation of Insolvency and Bankruptcy Code: Pitfalls and Solutions’ in August 2021.

With regards to the subject of IBC, the committee has been meeting various stakeholders like the finance ministry, as well as homebuyers.



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Parliamentary panel that includes former PM Manmohan Singh wants IBC overhaul, BFSI News, ET BFSI

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A parliamentary standing committee led by former Union minister Jayant Sinha set up to examine the workings of the Insolvency and Bankruptcy Code (IBC) has recommended an overhaul of the present system including a threshold rate of haircut for creditors.

The 29 member committee includes former prime minister Manmohan Singh.

Low recovery rates with haircuts as much as 95% and 71% of the cases pending beyond the 180 days timeframe envisaged by the law point towards a

deviation from the original objective of the Code.

“As the insolvency process has fairly matured now, there may be an imperative to have a benchmark for the quantum of “hair-cut”, comparable to global

standards,” the committee said without specifying what this benchmark could be.

It noted that though the new code has helped in substantially improving credit culture, there are long delays in cases due to the time taken to admit cases, allowing bidders even after the deadline and various challenges to the NCLT judgements.

The committee also expressed apprehension about fresh graduates being appointed as resolution professionals (RPs) expressing doubts over their handling of large cases. It pointed out that regulatory action has been taken in 123 out of the 203 cases examined by the Insolvency and Bankruptcy Board of India (IBBI).

The panel’s suggestions

Only high court judges be appointed to the National Company Law Tribunal (NCLT) to ensure quicker disposal of cases.

Instead of having multiple insolvency professional agencies (IPAs) a single body may be formed to oversee and regulate RPs.

Bring a professional code of conduct for the committee of credtors (CoC) the main decision making body approving a resolution plan and also a set of guidelines for the appointment of RPs to ensure transparency in the CoC.

NCLT should accept defaulters within 30 days and transfer control to a resolution process within this time period.

IBC needs to be amended so that no post hoc bids are allowed during the resolution process.

Involving national law schools so that conduct research, training and also provide support in the form of law clerks.

It has suggested dedicated benches of the IBC within the NCLT and also special benches for micro and small enterprises for quicker disposal of cases.

RPs should also be allowed to sell company assets depending on the demand, in parts to multiple bidders rather than in a block to get maximum value.



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Parliamentary panel that includes former PM Manmohan Singh wants IBC overhaul, BFSI News, ET BFSI

Banking & Finance

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A parliamentary standing committee led by former Union minister Jayant Sinha set up to examine the workings of the Insolvency and Bankruptcy Code (IBC) has recommended an overhaul of the present system including a threshold rate of haircut for creditors.

The 29 member committee includes former prime minister Manmohan Singh.

Low recovery rates with haircuts as much as 95% and 71% of the cases pending beyond the 180 days timeframe envisaged by the law point towards a deviation from the original objective of the Code.

“As the insolvency process has fairly matured now, there may be an imperative to have a benchmark for the quantum of “hair-cut”, comparable to global standards,” the committee said without specifying what this benchmark could be.

It noted that though the new code has helped in substantially improving credit culture, there are long delays in cases due to the time taken to admit cases, allowing bidders even after the deadline and various challenges to the NCLT judgements.

The committee also expressed apprehension about fresh graduates being appointed as resolution professionals (RPs) expressing doubts over their handling of large cases. It pointed out that regulatory action has been taken in 123 out of the 203 cases examined by the Insolvency and Bankruptcy Board of India (IBBI).

The panel’s suggestions

Only high court judges be appointed to the National Company Law Tribunal (NCLT) to ensure quicker disposal of cases.

Instead of having multiple insolvency professional agencies (IPAs) a single body may be formed to oversee and regulate RPs.

Bring a professional code of conduct for the committee of credtors (CoC) the main decision making body approving a resolution plan and also a set of guidelines for the appointment of RPs to ensure transparency in the CoC.

NCLT should accept defaulters within 30 days and transfer control to a resolution process within this time period.

IBC needs to be amended so that no post hoc bids are allowed during the resolution process.

Involving national law schools so that conduct research, training and also provide support in the form of law clerks.

It has suggested dedicated benches of the IBC within the NCLT and also special benches for micro and small enterprises for quicker disposal of cases.

RPs should also be allowed to sell company assets depending on the demand, in parts to multiple bidders rather than in a block to get maximum value.



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