PC demands review of IBC law to save ‘bleeding’ banks’

CHENNAI: Former union finance minister P Chidambaram has demanded a quick and thorough review of the IBC (Insolvency and Bankruptcy Code) to stop the bleeding of the banks.

Taking to Twitter to flag the issue of banks taking hefty ‘haircuts’ (losses incurred by banks on resolving bad debts), Chidambaram said, “I welcome the FM's concern that under the IBC process banks are taking hefty haircuts, in some cases as much as 95%. Some days ago, I had pointed out that in 514 cases of resolution, the banks had sacrificed Rs 5.24,000 crore!”

Reasoning that the IBC process has become a convenient cover for banks to write off large amounts lent to corporates, even while small borrowers like students are being harassed, the senior Congress leader critcized the lack of transparency in writing off loans of corporates and said, “The Committee of Creditors (CoC) is a cozy club where decisions on write-off are taken in an opaque manner. The 'haircuts' are a scandal. The FM should order a quick and thorough review of the IBC law and stop this bleeding of the banks.”

Chidambaram also borrowed the lines of rights activist Bezwada Wilson to take on the much-hyped Swachh Bharat Mission of Prime Minister Narendra Modi led BJP regime. “Listen to what Bezwada wilson had to say about the Swachh Bharat Mission: He called it “it is utterly useless because it simply does not make the link between sanitation, caste and patriarchy.” “When we say it we are dubbed as ‘urban naxals’ or the tukde tukde gang,” Chidambaram added.