New Delhi, May 24 (KNN) The curbs on promoters of micro, small and medium enterprises (MSMEs) from bidding during insolvency process to take over a company has been proposed to be eased by the Union Cabinet.

However, the rules for “related parties” in larger companies have been tightened.

Now the promoters of MSMEs who are not classified as wilful defaulters are allowed to bid for their companies. Currently, they are barred from doing so under the ambit of Section 29(A).

The Union Cabinet has approved an ordinance amending the Insolvency and Bankruptcy Code (IBC).

This follows suggestions made by a 14-member Insolvency Law Committee, submitted to the government in March.

The changes will need to be ratified by the President.

The changes to the IBC are likely to be effective prospectively and to affect companies for which resolution plans are yet to be submitted.

Currently, the recognised non-performing assets of the MSME borrowers is a staggering Rs 77,000 crore, according to data from Trans Union Cibil.