Defending the Ordinance to amend the Insolvency and Bankruptcy Code, 2016, Finance Minister Arun Jaitley on Tuesday took a dig at the previous UPA government and asked why it did not take action against loan defaulters.

Dismissing rumours that banks had given loan waivers to large companies, he said: “Time has come for the nation to be apprised of facts in this regard.”

Jaitley said between 2008 and 2014, public sector banks disbursed disproportionate sums of loans to several industries. “The public needs to ask rumour mongers at whose behest or under whose pressure were such loans disbursed,” he wrote in a blog post titled ‘The Fiction of Loan Waiver to Capitalists’.

Rather than taking action against wilful defaulters, the then government, by relaxing loan classification, kept the defaulters as non-NPA accountholders, he said.

“ When the debtors delayed repayment of loans and interest to PSBs , what decision was taken by the then government,” he asked.

The asset quality review (AQR) in 2015 revealed high levels of non-performing loans, the Finance Minister said, adding that subsequently, loans of about ₹4,54,466 crore, which were actually fit to be NPAs, and were under the carpet, were recognised after intensive scrutiny under the review.

Clean, effective system The new Ordinance will now put in place a clean and effective system through which wilful defaulters of bank loans would be kept away from the management of their business and also ensure time-bound recovery from them. “While honest businesspersons will be able to access loans from strong and reformed banks, strict and clear law and the all-round clean-up initiated by the Government would result in a clean system in the country,” he said.

Stressing that the government has not waived any loans of big NPA defaulters, he said under the new Insolvency and Bankruptcy Code, cases have been instituted in the National Company Law Tribunal for time-bound recovery from 12 large defaulters dues totalling ₹1,75,000 crore.

The Ordinance bars wilful defaulters and unscrupulous entities from bidding for stressed assets. It was approved by President Ram Nath Kovind on November 23, a day after being cleared by the Union Cabinet.

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