New Delhi, May 23: As per the data released by the Ministry of Corporate Affairs, a total of Rs 83,000 crore loan dues has been recovered from over 2,100 defaulters following the amendment of Insolvency and Bankruptcy Code (IBC).

As per the new IBC legislation, enacted in May 2016, a promoter of a defaulting company cannot participate in the bidding process unless he clears the dues. The move was aimed at preventing the promoters of taking possession of their bankrupt firms at a 'discounted price'.

The fear of losing ownership of their companies has prompted defaulters to settle their dues within the 90-day period. If their firm gets listed as a non-performing asset (NPA) by the National Companies Law Tribunal (NCLT), the promoters would be barred from either staking claim or participating in the bidding process.

The IBC legislation had drawn flak from major industry players, including Ruias of Essar, Singals of Bhushan Group and Gaurs of Jaiprakash Group, as they were prevented to participate in the bidding process of their NPAs.

The Finance Ministry, however, has brushed away the apprehensions raised by a section of the corporate sector, claiming the IBC Bill is serving as an efficient route to clear the losses incurred through NPAs.

The main aim of the Bill, a Finance Ministry official said, was to deter promoters from defaulting on the loans. Unlike the loopholes in the erstwhile law, the amended IBC will not allow the promoter to wilfully default on the loans, only to return to the bidding table and walk away with the stressed asset at a slashed price.

(The above story first appeared on LatestLY on May 23, 2018 10:20 AM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).