Comprehensive Bankruptcy Code for Ease of Doing Business

The Finance Minister, Shri Arun Jaitely presenting the Union Budget 2015-16, here today said that a significant part of the working capital requirement of a MSME arises due to long receivables realization cycles and we are in the process of establishing an electronic Trade Receivables Discounting System (TReDS) financing of trade receivables of MSMEs, from corporate and other buyers, through multiple financiers. This should improve the liquidity in the MSME sector significantly.

 Shri Jaitley said that Bankruptcy law reform that brings about legal certainty and speed, has been identified as a key priority for improving the ease of doing business. SICA (Sick Industrial Companies Act) and BIFR (Bureau of Industrial and Financial Reconstruction) have failed in achieving these objectives. We will bring a comprehensive Bankruptcy Code in fiscal 2015-16, that will meet global standards and provide necessary judicial capacity.

Trade Receivables Discounting System to enable invoice financing for MSME liquidity while a comprehensive bankruptcy code reforms insolvency resolution. An electronic Trade Receivables Discounting System (TReDS) will be established to facilitate financing of MSME trade receivables by enabling discounting of invoices from corporate and other buyers through multiple financiers to improve MSME liquidity. Separately, a Comprehensive Bankruptcy Code will replace SICA and BIFR to provide legal certainty, speed, alignment with global standards, and enhanced judicial capacity for insolvency resolution.