SICA an absolute failure, says finance minister

Speaking at the ‘National Conference on Insolvency and Bankruptcy: Changing Paradigm’ hosted in Mumbai on Saturday, Finance Minister Arun Jaitley said that the Sick Industrial Companies Act (SICA) was an absolute failure and Debt Recovery Tribunals (DRTs) were somewhat faster but not as effective as envisaged.  
 
Some of the points that the FM touched upon include: the only effective purpose SICA served was that it provided an iron curtain against the debtors; being a creditor inherently puts one at a disadvantage under the SARFAESI law even though it did serve some effective purpose for a while; under IBC any debtor has to service debt; and the ultimate objective of IBC is not liquidation but resolution.
 
He also stated that the Ministry of Finance will wait and see how effective the law is with regard to IBC. The RBI’s earlier efforts had met with some success but eventually it was still hard for creditors to change defaulting debtors. The conference was jointly organised by the Ministry of Corporate Affairs (MCA), National Foundation for Corporate Governance (NFCG) and Insolvency and Bankruptcy Board of India (IBBI).