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SC Only Quashed RBI Circular on Bad Loans, the Insolvency Law Still Hangs on Private Firms

The Supreme Court’s recent decision striking down the RBI’s February 2018 circular on bad loans highlights something significant about the state machinery—the extent to which it can be a source of risk for private businesses.

by Anirudh Burman

published by

Print

on April 5, 2019

Source: Print

The Supreme Court’s recent decision striking down the RBI’s February 2018 circular on bad loans highlights something significant about the state machinery — the extent to which it can be a source of risk for private businesses.

In that sense, the ruling provides an immediate relief to promoters in the power sector — mainly because the petitions challenging the RBI circular were primarily filed by power sector companies — from being dragged to insolvency courts under the Narendra Modi government’s 2016 legislation, the Insolvency and Bankruptcy Code (IBC).

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