Guarantor beware(Polity, GS-2, Law, The Hindu)

24 May Guarantor beware(Polity, GS-2, Law, The Hindu)

Posted at 24 May 2021 in Current Affairs, Governance, GS Paper II by Swarn Singh 0 Comments

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Context:- The Supreme Court judgment of:- upholding creditors’ right to proceed against personal guarantors to loans provided by them to a corporate borrower. This will help in lifting the uncertainty over the extent to which banks and other financial lenders can pursue.

Why this is a good move:-

Corporates are the guarantor in thousands of crore rupees.
When corporates will become liable then they will pressurise the debtors
In this case there will be successful execution of IBC code.
It will help the banks in recovering the loans
resolution plan for the corporate debtor does not extinguish the personal guarantor’s liability

How to solve the NPA issue in indian banking system

PARA a bad bank as recommended by the economic survey.
A comprehensive communication and a data scruitnise before lending
A clear communication between the banks so that same loan can’t be disbursed by the banks
A quick resolution process.
Banks have to accept losses on loans so that RBI will get to know about the real situation.
With out fear of 3C i.e. CVC, CBI, Courts
The Indian Banks’ Association has set up a six-member panel to oversee resolution plans of lead lenders. To expedite resolution, more such panels may be required.