PSU banks gain 1-4% on buzz of Cabinet nod for Ordinance to changes IBC
Shares of public sector banks gained 1-4 percent intraday on Wednesday as investors reacted to Cabinet’s actions.
Sources told CNBC-TV18 that the Cabinet had cleared an ordinance for changes to Insolvency and Bankruptcy Code (IBC). The Ordinance will be presented during the Winter Session of the Parliament.
State Bank of India, Punjab National Bank, Bank of Baroda, Bank of India, and Canara Bank, among others gained 1-4 percent.
IBC is likely to help in streamlining the process of selecting buyers of stressed assets. The number of cases under the Insolvency and Bankruptcy Code is rising and a 14-member panel was set up to identify and suggest ways to address issues faced in implementation of the law.
IBC is aimed at preventing promoters who are wilful defaulters or have a history of fraud from buying companies cheap.
“The proposed amendment in Bankruptcy Code will help the financial creditors who form part of the Committee of Creditors to take a calculative decision to handover stressed assets/ accounts to promoters/directors who are not wilful defaulters. The proposed amendment appears to be extension of IBBI circular issued a few weeks back. The Ordinance may provide some negative marking for existing promoters/directors of stressed accounts as well as wilful defaulters from entering bidding process to buy such accounts,” Nishit Dhruva, Managing Partner, MDP & Partners said in a statement.