On Friday, the ministry notified the framework for dealing with systemically important FSPs, excluding banks, under the Code wherein sectoral regulators can seek resolution of stressed entities.
The introduction of the “generic framework” comes against the backdrop of the ongoing liquidity crisis in the non-banking financial companies (NBFCs) that has also sparked concerns about overall stability of the financial sector.
“Non-banking finance companies (which include housing finance companies) with asset size of Rs 500 crore or more, as per last audited balance sheet,” can be taken up for insolvency resolution and liquidation proceedings under the Code, the ministry said in a notification.
Section 227 of the Code enables the central government to notify, in consultation with the financial sector regulators, FSPs or categories of FSPs for the purpose of insolvency and liquidation proceedings.
Significantly, the corporate insolvency resolution process for an FSP would be…