New Delhi,  (IANS) The Lok Sabha on Thursday gave its nod to the Insolvency and Bankruptcy Code, 2016, that seeks to improve the ease of doing business in the country.

The measure seeks to overhaul the laws regulating insolvency amid a surge in bad loans. The bill will now go to the Rajya Sabha for its consent.

Piloting the legislation, Minister of State for Finance Jayant Sinha called it “transformational” and one that will restore the balance of power between the promoters and creditors.

It also seeks to amend the laws, including the Companies Act, to become an overarching legislation.

Officials and experts say the passing of the legislation before May 31 can help India improve its rankings in the World Bank’s “ease of doing business index”.

At present on the parameter of resolving insolvency, India is ranked 136 among 189 countries.

Once it gets the Rajya Sabha nod, the new law will give the banks “more confidence” to lend for long-term projects such as roads, ports and power plants, officials said.

The new draft legislation contains amendments to the original Code introduced in December 2015 as suggested by a joint parliamentary panel.

The new Insolvency and Bankruptcy Code aims to slash the time it takes to wind up a company or recover dues from a defaulter.

Bharatiya Janata Party sources told IANS that the bill will boost Prime Minister Narendra Modi’s ‘Made in India’ programme and attempts to improve the ease of doing business, as promised by the National Democratic Alliance dispensation to the foreign investors.

The new code seeks to replace the existing century-old bankruptcy laws and provide a time-bound process for resolving insolvency issues.

It will cover individuals, companies, limited liability partnerships and partnership firms.

The government expects the bill to get Rajya Sabha approval too since members from the upper house too were a part of the joint committee on the issue.

“There were 12 laws, some of which were more than 100 years old, to tackle insolvency and now there will be one law. We will be able to quickly move up the World Bank rankings,” Sinha said while replying to the debate.

The bill, after its introduction in December last year, was referred to a joint committee of both houses. The committee, which submitted its report last week, proposed a number of changes.

The parliamentary panel also recommended that money due to workers and employees from the provident fund, pension fund and gratuity fund should not be included in the assets of estates under liquidation.

Among others, Gaurav Gogoi and Sushmita Dev (Congress) and Saugata Roy (Trinamool Congress) also spoke on the issue.

The members underlined that the “implementation” of the new Code will be key to its success and future roadmap.

The members also suggested that the government will have to move faster to strengthen debt recovery tribunals and the appellate tribunals for effective implementation of the new law.