The Rajya Sabha on Monday passed The Banning of Unregulated Deposit Scheme Bill, 2019, and the Insolvency and Bankruptcy Code (Amendment) Bill, 2019. Meanwhile, the Lok Sabha passed the Repealing and Amendment Bill, 2019 — to repeal 58 obsolete laws — and a Bill to replace the 63-year-old Medical Council of India (MCI) with the National Medical Commission.

The Rajya Sabha on Monday passed The Banning of Unregulated Deposit Scheme Bill, 2019, and the Insolvency and Bankruptcy Code (Amendment) Bill, 2019. Meanwhile, the Lok Sabha passed the Repealing and Amendment Bill, 2019 — to repeal 58 obsolete laws — and a Bill to replace the 63-year-old Medical Council of India (MCI) with the National Medical Commission.

Health Minister Harsh Vardhan described the National Medical Commission Bill, 2019, as one of the biggest reforms that will end 'inspector raj' in the medical education sector.

The Bill also has a provision for making national standards in medical education uniform by proposing that the final year MBBS exam be treated as an entrance test for post-graduation and a screening test for students who graduate in medicine from foreign countries. This exam, called the National Exit Test (NEXT), would ensure that the proposed National Medical Commission (NMC) moves away from a system of repeated inspections of infrastructure and to focus on outcomes rather than processes, Vardhan said.

Opposition members objected to provisions like exit exam and replacing elected members with nominated members in the proposed commission. They alleged that the legislation was against the spirit of federalism.

It is like "throwing the baby with the bathwater... the cure seems to be worst than the disease", Congress' Manish Tewari said during the debate and claimed the Bill would end up legalising capitation fee.

However, Vardhan allayed the apprehensions saying genuine concerns over the Bill have been addressed. He said the legislation is "anti-vested interests", will help end "inspector raj" and increase the number of seats in medical colleges. "NMC will be lean and effective," Vardhan said.

He termed the legislation as "pro-poor" saying it would bring not only government seats but also 50 percent of all private seats within the reach of meritorious students belonging to economically-weaker sections.

The minister also added that the Government of India will have no role in the day-to-day running of the medical colleges.

"Yearly inspections have been done away with. This is expected to do away with inspection raj and foster addition of UG and PG seats in the country," he added.

Rajya Sabha clears two Bills

The Rajya Sabha approved amending the three-year-old Insolvency and Bankruptcy Code (IBC), providing clarity about preference to secured lenders over operational creditors and giving lenders explicit authority over distribution of proceeds of auction of loan defaulting companies.

Replying to a debate on the Insolvency and Bankruptcy Code (Amendment) Bill, 2019, Finance Minister Nirmala Sitharaman said the changes being brought in now are in response to events that eroded legislative intent of the IBC.

She referred to the Essar Steel insolvency case where the lenders and operational creditors have been treated at par by the bankruptcy court for distribution of auction proceeds.

The amendments give a committee of creditors of a loan defaulting company explicit authority over the distribution of proceeds in the resolution process and fixes a firm timeline of 330 days for resolving cases referred to the IBC. These are in response to "newer challenges coming up", she said, adding that the government speedily came up with the amendments in response to the developing situation.

The National Company Law Appellate Tribunal (NCLAT) had recently ruled in the Essar Steel Ltd's case that the Committee of Creditors (CoC) had no role in distribution of claims and brought lenders (financial creditors) and vendors (operational creditors) on a par.

The amendment now equates distribution of amounts under a resolution plan with the manner it's allowed in case of liquidation, maintaining the hierarchy of lenders. The change will be retrospective, making it applicable for ongoing cases. Sitharaman quoted a Supreme Court judgment to say that "defaulters paradise is lost" through IBC. Amendments are clarificatory in nature and the "intent of the government is maximisation of value while simultaneously adhering to strict timelines", she said.

Congress leader Kapil Sibal lashed out at the government for not doing enough to deal with unemployment issue. "The backbone of the economy is the MSME sector. If you look at insolvency proceedings, only 94 petitions have been resolved so far, and 3,378 have commencement of liquidation. In other words, four out of five companies go into liquidation. You can realise what impact it has on the employment sector. On one hand, you're seeking to resolve this matter but on the other hand you're creating huge unemployment issues," he said. He further hit out at the Centre for "creating an oligopoly in the country" and demanded that the Bill be sent to a Select Committee.

Samajwadi Party MP Ravi Prakash Verma backed Sibal and said the problems arising after the Bill becomes an Act will be a challenge for the country. "There aren't enough judges or insolvency experts in courts (NCLATs)," he said, adding, "The Amendment is inadequate to meet the challenges."

Opposing the IBC Amendment Bill, 2019, RJD's Manoj Jha said the amendment Bill will allow for "shadow litigations". "I think there is no harm in revisiting some of our macroeconomic policies and priorities," he said.

However, Congress leader Jairam Ramesh said he welcomed the Insolvency and Bankruptcy Code and the proposed amendments as well. "There is no harm in learning and evolving. In the second round of amendments, I said there will be a third round of amendments, and here we are. And now, I'm saying there will be a fourth round of amendments and there is no harm in admitting it," he said.

Cutting across party lines, members in the Rajya Sabha supported The Banning of Unregulated Deposit Scheme Bill, 2019, which seeks to regulate unregulated deposit schemes in the country and protect the money of poor depositors.

CPM leader Elamaram Karim, however, moved a resolution opposing the ordinance route taken by the government to bring this Bill just before the Lok Sabha polls.

Asserting that he does not question the merit of the Bill, Karim said it was not a good practice to bypass parliamentary procedure and bring an ordinance.

The Banning of Unregulated Deposit Scheme Bill, 2019 had already been passed in the Lok Sabha. Later, Minister of State for Finance Anurag Thakur moved the Bill for discussion in the Upper House and members from various parties welcomed it and offered suggestions as well.

Participating in the debate, Suresh Prabhu (BJP) said it is a comprehensive Bill which is a necessity for the economy as this will help mobilise savings in regulated environment.

Prabhu, however, suggested the finance minister look at Clause 12 in Chapter 5 of the Bill "very seriously" to avoid dichotomy in view of amendments being brought to section 53 of the IBC law.

Noting that a big challenge before the country was to look at ways to mobilise savings, the BJP leader said, "China has 50 percent savings rate in a $12.4 trillion economy. It has $ 6.2 trillion savings that could be brought back into investment. We have to increase our savings rate."

Savings can be improved if there are intermediaries like Non-Banking Finance Companies (NBFCs). But intermediaries need to be regulated. And also, there should be a fine trade off between those who mobilise deposit and protect the interest of depositors, he added.

AITC member Derek O'Brien supported the Bill, saying this is the first Bill brought for passage in the House after being scrutinised by a parliamentary panel. "None of 14 Bills went through parliamentary scrutiny," he said.

O'Brien said that it is a water-tight Bill that aims to curb fraudulent practices in ponzi schemes and chit funds as he mentioned fraud cases like Pearl Chit Fund of Rs 49,000 crore that affected 5,500 crore depositors and Gujarat's Oscar Chit Fund that had deposit from 1.2 lakh people.

T Subbarami Reddy (Congress) supported the Bill, stressing that the poor should be protected from unregulated deposit schemes and norms should be made more stringent.

Currently, the NBFCs are in a bad shape because of two-three unscrupulous companies and the government should take steps to address the problems, he said. JD(U) leader Ramnath Thakur, Vishambhar Prasad Nishad (SP) and Prashanta Nanda (BJD) also supported the Bill.

K Soma Prasad (CPM) said it is high time such a law be brought that could protect investors and put an end to such schemes. He, however, expressed apprehensions that the law is harsh and could provide harsh treatment to people in villages.

"There is ambiguity in the law and there must be clarity for acceptance of loans for personal exigencies," he said, adding that the government should ensure maximum publicity to the law.

Manoj Kumar Jha (RJD) supported the Bill but had a word of caution, saying bureaucracy should not be given so much power that might create a state within a state, that might create problems later. He called for action on such deposits at the beginning itself.

Earlier, the Rajya Sabha proceedings were briefly adjourned following uproar by Opposition parties over the road accident in Rae Bareli in which the Unnao rape survivor was critically injured while two others were killed. In the Lok Sabha, Samajwadi Party leader Azam Khan apologised to BJP member Rama Devi for the objectionable remarks he made last week against her. Though Khan had to repeat his apology twice in the House, a visibly peeved Devi said the member has the habit of uttering derogatory words against women.

With inputs from agencies