MCA finalising special insolvency resolution under IBC for MSMEs

New Delhi, July 13 (KNN) In a bid to provide relief to Micro, Small and Medium Enterprises (MSMEs), the Ministry of Corporate Affairs (MCA) is finalising a special insolvency resolution under section 240A of the Insolvency and Bankruptcy Code (IBC), 2016.

"The Ministry of Corporate Affairs is finalising a special insolvency resolution under section 240A of the Code, to provide relief to the MSMEs and the same would be notified soon," a statement released by the Finance Ministry said on Sunday after Nirmala Sitharaman reviewed progress of the Atmanirbhar Abhiyaan so far.

The statement also stated that the threshold of default under Section 4 of the IBC has been raised to Rs 1 crore from existing Rs 1 lakh.

“In exercise of powers conferred under Section 4 of Insolvency & Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby specified Rs 1 crore as the minimum amount of default for the purposes of the said section” vide Notification dated 24.6.2020,'' it said.

''Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 has been promulgated on June 5, 2020 thereby provided for insertion of Section 10A in the Insolvency and Bankruptcy Code 2016 to temporarily suspend initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7, 9 & 10 of the Code for a period of six months or such further period, not exceeding one year from such date,'' the statement added.

Beside this, the Rs 30,000 crore Special Liquidity Scheme for NBFCs/HFCs, has been launched after the cabinet approval.

''RBI has also issued a circular to NBFCs and HFCs on 1st July, 2020 itself on the Scheme. SBICAP has received 24 applications requesting about Rs. 9,875 crore of financing as on 7th July, 2020 which are being processed.  The first application in this regard has received its approval and the remaining are also being considered,'' the statement said.

During the latest review of the Atmanirbhar Bharat package by Finance Minister Nirmala Sitharaman, progress of various schemes was discussed, including the Rs 3 lakh crore credit guarantee scheme for the MSME sector hit hard by the COVID-19 pandemic.

Banks have sanctioned loans of about Rs 1,20,099 crore under the Rs 3 lakh crore Emergency Credit Line Guarantee Scheme (ECLGS) for the MSME sector, the statement said.

However, disbursements against this stood at Rs 61,987.90 crore till July 9 under the 100 per cent ECLGS for micro, small and medium enterprises (MSMEs).