| Sinha: leaves a controversial creditors' rights ordinance in the pipeline as he departs from the finance ministry |
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Just days before he was transferred from his job as India's finance minister in June, Yashwant Sinha tried to fulfil an old promise to strengthen the rights of creditors.
By pushing through a new ordinance, yet to be cleared by parliament, that will help banks get tough with defaulters, Sinha stirred a hornets' nest among India's corporate bigwigs. Jaswant Singh, his successor, faces a tough challenge in trying to get parliament to support the draft law.
Indian companies, long protected from bankruptcy or foreclosure by old socialist laws, are outraged. In the past they simply declared themselves sick to escape paying back loans or to prevent creditors from taking over secured assets. Once placed under the Board for Industrial&Financial Reconstruction, a rehabilitating agency, they could strip assets, leaving creditors high and dry.