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'RBI to evolve bankruptcy code to rehab sick enterprises'
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Saurabh Gupta | 10 Sep, 2015
Today bankruptcy and insolvency are probably the main reasons of any
sick enterprise, keeping this in consideration the Reserve Bank of India
(RBI) would shortly evolve and finalize suitable guidelines for putting
in place bankruptcy code as well as directives for deepening the bond
markets as the working committee has been intensely working on the twin
issues, the Deputy Governor, RBI, S S Mundra said at a summit in New
Delhi on Wednesday.
Delivering his key note address at
a Summit on "Financing India's Growth: Way Forward" under aegis of PHD
Chamber of Commerce and Industry, the Deputy Governor ruled out
possibilities for guidelines to institutionalize development finances
(DFIs) through state mechanisms that were in vogue earlier.
On
the contrary, he advised that development finances to fund long term
mega infrastructure projects should be arranged for through market
sources and pumping good equity in them by their promoters themselves
instead of DFIs route.
"The time has come for
directives to ensure deepening of bond markets to raise capital for long
term infrastructure projects and bankruptcy code to bring about a sound
discipline for borrowers for obtaining humongous size of capital from
financial institutions with covering their risks factor and the
committee in the RBI has been actively acting on these two issues," said
Mundra adding that borrowers should be made aware and accountable for
their obligations.
He, however, did not give any
particular time limit by when such guidelines would be put in public
domain, barring adding that it would happen shortly.
Mundra
further added that the RBI would continue to address the issue of
inflation and try to maintain its equitable balance with the issue of
growth without largely commenting on the issue of reducing the interest
rates.
According to him, there should be a fair
balance for allocation of finances by banks and financial institutions
towards capital intensive and labour intensive industry units as it
would eventually lead to meaningful growth for which the entire system
is working in tandem with all stakeholders.
Chairman
& Managing Director, Export Import Bank of India Yaduvendra Mathur
in his observations demanded revival of institutions that would
extensively support developmental finances and in the new age economy
such institutions were systematically decimated. Institutions that can
undertake long term financing to support projects leading to growth be
encouraged was the key point Mathur was pitching for.
In
his welcome remarks President, PHD Chamber Alok B. Shriram made a
strong argument for MSMEs segments of India Inc. to enable it access
capital at cheaper rate of interest as on account of its
non-availability, India has not been able to realize the potential of
MSMEs both in terms of volumes and exports.
Among
others who were present on the occasion comprised Dy. Managing Director
(Corporate Strategy & New Business) State Bank of India Sunil
Srivastava, Senior Vice President, PHD Chamber Mahesh Gupta and its
Banking Committee Chairman and Co-Chairman Sanjeev Gupta and Ashish
Agrawal along with Business Head, CRISIL Ratings Raman Uberoi.
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Customs Exchange Rates |
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