Why in the discussion?
The Insolovency Law Committee-ILC, set up for the recommendation of the amendment in the Indian Bankruptcy and Bankruptcy Code, 2016 by the Ministry of Corporate Affairs, submitted its second report to the government.
- ILC has recommended the implementation of the United Nations Commission on International Trade Law (UNCITRAL) draft law for cross border loan repatriation, since it includes comprehensive provisions for dealing with cross border debt relief issues.
- The Committee has also recommended certain provisions for resolving any discrepancy between the provisions relating to domestic lending capacity and proposed border crossings.
- The UNCITRAL draft law has been implemented in about 44 countries. Therefore, it has been included in the best traditions on international level to deal with issues related to cross border borrowing.
- It is beneficial for the inclusion of provisions related to domestic processes and protection of people’s interests.
- Other features include creating more confidence among foreign investors, reliably connecting with the domestic lending law and establishing a strong mechanism for international cooperation.
- This format law includes four major principles of cross border
debt relief , such as: 1. Direct access to foreign lending businessmen and foreign lenders to participate in the domestic lending process against a violating debtor or launching it.
2. The provision of recognition and improvement of foreign processes.
3. To maintain cooperation between the domestic and foreign courts and the lending businessmen.
4. Coordination between two or more creditworthiness processes in different countries.
India needs cross border loan framework
- Under the bankruptcy and bankruptcy code, the requirement of cross border loan framework arises from the fact that many Indian companies have a global identity and many foreign companies have presence in many countries including India.
- India’s bankruptcy and bankruptcy code, the inclusion of cross border debt relief clauses in 2016 would be a major step and thus India’s bankruptcy law would be more mature.