IBC rules for NBFC resolution credit positive for banks, says Moody's
Rating
agency Moody's on Monday said the amendments to India’s bankruptcy
code enabling the resolution of finance companies are credit
positive for banks.
India's
banks are largest lenders to non banking finance Institutions (NBFI).
The provisions in the IBC provide for the orderly resolution of a
stressed company. Until now, the only resolution framework for NBFIs
was through liquidation.
"We
expect an orderly resolution process via the IBC will help limit
losses for creditors as compared with liquidation," Moody's said
in a statement.
On
November 18, 2019, the government (Baa2 negative) amended the
country’s Insolvency and Bankruptcy Code (IBC) 2016. It allows for
the resolution of NBFIs, including housing finance companies, with
asset sizes greater than Rs 500 crore via the IBC.
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