Riddhika Somani, BBA LLB, Presidency University, Bangalore
ABSTRACT
The Indian Banking system is crucial part in shaping the credit culture in India. Banks are responsible for carrying out various functions and one of them includes accepting deposits and lending loans. This process of lending loans creates credit. If the borrowers default in paying their loans then banks will not be able to create credit in the economy. Over the past decade the gross amount of Non- Performing Assets had been increasing with each passing year. Due to the increase in the number of NPAs the credit flow in the economy has been disrupted. Thus, apart from the already existing legal measures the banks required a more effective legal measure for recovery of these defaults.
The Insolvency and the Bankruptcy Code, 2016 was enacted with the objective of providing quick remedy to lenders. This Code has changed the entire credit culture of the economy by shifting the power from the hands of the borrower to the hands of the creditor. Thus, this paper puts a light on the legal measures that are available to banks for recovery of their dues and also the impact on the Insolvency and the Bankruptcy Code, 2016 on the banking sector.
