Full form of BIFR?
"Board of Industrial and Financial Reconstruction" is the full form of BIFR. BIFR was an agency of the Government of India and a department of the Department of Financial Services of the Ministry of Finance that was created under the Sick Industrial Companies Act (SICA) 1985. Its purpose was to rehabilitate and recover sick undertakings and to close or liquidate the ability of sick performance to grow or occur in the future or long term.
Objectives of BIFR
- The BIFR consists of a Chairman and two to fourteen other representatives.
- A prerequisite for all members to be elected High Court judges is that, otherwise, they should have at least 15 years of basic professional experience.
- The council organizes and supervises only large or medium-sized diseased industrial enterprises where a huge amount has been destroyed.
History of BIFR
- The industrial disease started in pre-independence days in India. The Indian government tried to combat this in the early days with some ad-hoc procedures involving the nationalization of banks to provide provisional assistance.
- RBI established the Tandon Committee in 1975. In 1976, after one year, the HN Ray Committee was organized and constituted. The steps proposed by these committees were not sufficiently effective and necessary.
- The Tiwari Committee was formed in 1981 and proposed broad-based legislation to deal with the industrial disease. Consequently, SICA came into existence in 1985, and BIFR was established under SICA in January 1987.
- AAIFR (Appellate Authority for Industrial & Financial Reconstruction) was established in April 1987.
- In 1991, government companies were admitted under SICA. Then, public and private organizations with occupational disease cases were included.
- An amendment bill was introduced in 2001 when the government felt that the BIFR had not achieved its objectives of preventive industrial diseases.
- In 2003, the Sick Industrial Companies Repeal Act was passed, again replacing SICA and allowing BIFR & AAIFR to deal with NCLT (National Company Law Tribunal) and NCLAT (National Company Law Appellate Tribunal).
Goals of BIFR
Under SICA, the board of directors of a sick industrial organization was constitutionally bound to report it to the BIFR, and the BIFR could file any petitions expected to decide whether the organization was sick or not.
Among the various goals were policies to provide access, bring ailing industrial organizations to life, and divest public property. If the organization is in distress, the BIFR could give the organization reasonable time to restore welfare or suggest various other measures. The board could carry out multiple activities, including changes of offices, the merger of a limited entity with a healthy entity, and market or financial transformation. The board could suggest that the organization stops.
The BIFR was designed to connect the constitutional break between sickness and recovery. It would force the completion of timetables for recovery-related exercises, the management of their use, and the conduct of occasional audits of sick records. The BIFR would convene a conference to share perspectives, plan work, and draft a consolidated resolution to deal with ailing organizations, which would speed up reconstruction activities. BIFR intended to make sick organizations profitable within half a year or ask for the dissolution of the organizations.