Code will facilitate early, transparent and fair resolution of liquidity problems. Hence, the position of lenders under the Code is much better compared to earlier laws as discussed above. Therefore, there is no justification whatsoever in RBI directive to banks to create provision of 50% of the outstanding debt at the time of application to NCTL for initiating insolvency resolution process and balance 50% at the time order for liquidation of corporate at the time order for liquidation of corporate for realization of debts due to Financial Creditors is passed by NCLT. Rather, the RBI should dilute the existing provisioning guidelines in favour of lenders.
