The full form of BIFR is the Board for Industrial and Financial Reconstruction. This agency was instituted in 1985 and abolished in 2003. It was established under the SICA (Sick Industrial Companies Act), 1985. It operated under the Department of Financial Services of the Union Ministry of Finance. BIFR was established to restructure and revitalise sick undertakings. In addition, the agency was responsible for liquidating or shutting down companies with poor performance.
History of BIFR
Here is a brief history of the Board for Industrial and Financial Reconstruction:
- India experienced industrial distress during its pre-independence era. The government’s initial response included ad-hoc measures like nationalising banks to provide temporary aid.
- The Tiwari Committee was established in 1981. It recommended a comprehensive legal framework to address industrial distress. As a result, the Sick Industrial Companies Act (SICA) was enacted in 1985, leading to the formation of the Board for Industrial and Financial Reconstruction (BIFR) in January 1987.
- The Appellate Authority for Industrial & Financial Reconstruction (AAIFR) was established in April 1987.
- In 1991, SICA was amended to encompass government-owned enterprises. Over time, both public and private entities with industrial troubles were included.
- The Amendment Bill was introduced in 2001 to address shortcomings in the BIFR’s ability to prevent industrial distress. In 2003, the Repeal Act replaced SICA and called for the replacement of AAIFR and BIFR with the NCLAT (National Company Law Appellate Tribunal) and NCLT (National Company Law Tribunal), respectively.
Objective of BIFR
Here are the primary objectives of the Board for Industrial and Financial Reconstruction:
- To offer operational and financial reorientation of poor-performing enterprises.
- To rehabilitate sick industrial organisations and revive them.
- To secure the interests of employees and other stakeholders of degrading industrial companies.