From Financialexpress · Manu Kaushik · · 1m 10s
IBBI Study Proposes Insolvency Pros for Failed Bank Liquidation
IBBI recommends insolvency professionals to manage failed bank liquidations under RBI and DICGC oversight.
In brief
IBBI recommends insolvency professionals to manage failed bank liquidations under RBI and DICGC oversight. The IBBI study proposes appointing IBBI-certified insolvency professionals to handle failed bank liquidations with RBI and DICGC supervision, improving recovery of assets after insured deposits are paid…
IBBI Study Recommendation
The Insolvency and Bankruptcy Board of India (IBBI) study recommends insolvency professionals handle failed bank liquidations under RBI and DICGC supervision.
Current Bank Liquidation Process
Currently, bank failures are managed under banking laws with RBI, DICGC, and the relevant registrar playing different roles.
Proposed Role for Insolvency Professionals
IBBI-certified insolvency professionals would manage failed banks' remaining assets while RBI and DICGC retain oversight.
Expert Support for Change
Experts say insolvency professionals with financial sector expertise could improve loan recovery after insured deposits are paid.
Deposit Recovery Success
More than 97% of depositors in failed banks receive money from DICGC within the insured limit of Rs 5 lakh.
Next Steps for Liquidation
The study recommends fixed timelines for liquidation, quarterly reports, audits, and mechanisms to replace underperforming liquidators.
The main idea
The IBBI study proposes appointing IBBI-certified insolvency professionals to handle failed bank liquidations with RBI and DICGC supervision, improving recovery of assets after insured deposits are paid.
