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Government to raise NCLT members to 60 from 32 soon to ease pressure

In the first week of November, the government brought an Ordinance to shift administrative and routine matters out of NCLT.
KOLKATA: The government has intensified efforts to ease the pressure on the National Company Law Tribunal (NCLT) and is learnt to be in the final stages of hiring judicial and technical members for it, a person familiar with the matter said.

The number of NCLT members will be raised to 60 from 32 and while the new members would be mostly hired for NCLT benches in Delhi and Mumbai, which see the highest traffic, the person cited above said.

This is part of a bid to address the slow pace in bad loan resolution despite it being a time bound exercise under the law. The ministry of corporate affairs last month shifted administrative and routine cases out of NCLT to declog the system.

There has been criticism on the slow progress in corporate insolvency resolutions as 50% of the cases have exceeded the 180 day deadline, while 30% have crossed the 270 day deadline, the maximum time allowed for resolution under Insolvency & Bankruptcy Code.

The government had earlier set a target of setting NCLT in about 24 locations but so far NCLT courts exist in only 14 cities, including new locations such as Cuttack, Kochi and Jaipur.

The number of pending corporate insolvency resolution processes under the IBC grew to 816 as on September 30, 2018 from 723 three before.

"The system worked quite well. But it could have been better," Insolvency & Bankruptcy Board of India chairperson, MS Sahoo, said.

“The lenders for the initial 12 companies in RBI’s list of June 2017 are estimated to have lost out on about Rs 4,000 crore in additional income due to delays in the resolution process beyond the 270-day period,” rating form ICRA said in a note.

In the first week of November, the government brought an Ordinance to shift administrative and routine matters out of NCLT.

"The ordinance paves the way for reducing the burden of the NCLT and shifting insignificant matters in the hands of the central government which will probably delegate such matters to Regional Director or the Registrar of Companies," said Megha Saraf, a manager with advisory firm Vinod Kothari & Company.

“The regulatory authorities could consider increasing the minimum threshold of one lakh rupees for approaching the NCLT and subsequently reduce it again once the NCLT benches have been expanded,” ICRA suggested.

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