INSOLVENCY AND BANKRUPTCY ACT AND ITS IMPACT ON

BANKING SECTOR
Submitted by:

Divya Raunak
Raunak, B.A. L.L.B (Hons)

Submitted to:

Mr. Vijayant Sinha,

Faculty of Legal Methods and Research Methodology.

This rough draft is submitted in the partial fulfilment of the topic Insolvency
and Bankruptcy Act and its impact on the banking sector.

9th of August, 2019.

Chanakya National Law University, Patna

 1. INTRODUCTION
“I spend my life constantly calling in ‘imaginary’ debts that aren’t owed to me
in order to avoid the ‘real’ debts that I owe to others, and so everybody ends up
bankrupt.”
― Craig D. Lounsbrough, Author

The author has put emphasis on the introduction of Insolvency and bankruptcy
code, 2016. This is a major economic reform introduced by the ruling government
in 2016. It solved many problems regarding the non performing assets of the
banks.
It is an act to consolidate and amend the laws relating to reorganisation and
insolvency resolution of corporate persons, partner ships firms and individuals in
a time bound manner for maximisation of value of assets of such person, to
promote entrepreneurship, availability of credit and balance the interests of all the
stakeholders including alteration in the order of priority of payment of
government dues and to establish an Insolvency and Bankruptcy Board of India,
and for other matters connected therewith or incidental thereto.

Since our banking sector is facing the problem of nonperforming assets . They
were and are facing heavy losses . There were imminent needs to bring any such
act which can solve the problems of nonperforming assets in a time bound
manner. 1332 cases solved before the National company law tribunal (NCLT).
4452 cases disposed at the very pre admission stage .Amount of around Rs 2.02
lakh crore was settled. 66 cases resolved after adjudication in a time bound
manner. There were also realisation of creditors of around Rs. 80,000 cr in
resolution cases. Defaulters know that when they will not return the loan amount
in a particular period of time then they will get into insolvency and bankruptcy
code. They will also have to face the provision of section (29) of the IB Act.
The purpose of this project is to enlist the provisions, tribunal and functionaries of
the IBC. But this act has also many loopholes and there has been suggestion
regarding the very act but still the work has not been accomplished.
2. Objective of the study:
1. The researcher wants to enlist the provisions and tribunals of IBC.

2. The researcher wants to describe the functions and methods that how
Insolvency and Bankruptcy Board of India works.

3. The researcher through his research will suggest some of the amendments to
fulfil the loopholes of this act

3. Hypothesis
The researcher has made the following hypothesis:
Shopping for an insolvency forum within the India appears to have become a
rather popular topic of debate in the recent years. The problem of nonperforming
assets of the bank is soaring with a high rate which is fatal for the Indian banking
system.
Whether after introduction of Insolvency and bankruptcy code, problems of
nonperforming assets have been solved or the various functionaries of IBC are
working according to their rules and regulations.
Effectiveness of IBC on ease of doing business and solution of twin balance
sheet problem.

4. Research Methodology

The researcher will do doctrinal type of research in which he will go through the primary
as well secondary sources. The researcher through this methodology will be able to get an
exact picture of the problem in question. The doctrinal method helps in doing a
comparative study of the topic. This methodology helps in going through not only the
 work of one eminent person but of many other too. This helps in getting the bird’s eye
view of the subject.
To satisfy the need of the project, the researcher will go through section by section and
clause by clause of each section in question. Then, the researcher will cross checked the
commentary of those provisions. This methodology will be the most effective way in
preparing the project.
The researcher will also discuss about various reforms introduced in the banking sectors
by the government and its effectiveness on the Indian economy .researcher will also
discuss about NCLT, function and powers of IBC, throws some light on the controversial
section (29) of the IBC act.

The researcher has also planned to make a chart showing the data how the provisions are
misused by the opposite sex. The state wise data of false cases out of the total cases filed
will show the actual face of the menace.
The researcher has also planned to make an informative ppt which will primarily focus on
the law commission reports and the Supreme Court decisions which will give the
rationale behind the concept of IBC. It will show the change in the cases before the SC
with time.

5. SOURCES OF DATA COLLECTION

The researcher will collect data from both primary as well as secondary
resources.
1. The primary resources;

I.Ministry of Corporate Affairs

II. Ministry of Law and Justice

III

2. The secondary sources are ;

I. BOOKS
 II.Journals

III.Magazines

6. .Limitations of the study

Since the researcher is a student of law, he has access to a limited area. The researcher
having read the commentary on the IBC could understand the problem clearly but it
would have been clearer if he would have read commentary of more writers. The
researcher has limited time for the project. The historical need and background is also
necessary for having a bird’s eye view of the particular topic and it gets developed only
by effective and extended reading over a long period of time. But the required materials
are not available in our library. The researcher has a restricted access to the reports of the
law commission where the reasons of their work I not available. But still researcher with
his hard work will manage to take out the best possible work.

7. Scope of study
The research if implemented will stop the influx of the false cases and it will stop
the misuse of some of the provisions of the IBC act . it will also help in
strengthening the institution of banking sector of India. It will help in identifying
the loopholes of IBC and suggest methods for their fulfilment .

8. Tentative chapterisation

I. Insolvency and BANKRUPTCY CODE : AN Introduction

II. Evolvement of IBC in India.
III. Tribunals and functionaries of IBBI.
IV. Important Sections of The IBC Code.
V. Important case study.
9. Bibliography
 Primary resources
o Gazette of ministry of corporate affairs
o Gazette of ministry of law and justice.
o Newspapers articles
 Secondary resources.
o Insolvency and bankruptcy code ,2016 by Jyoti Singh and Vishnu Shriram
o Insolvency and Bankruptcy Code ready reckoner by CA Kamal Garg