SME Times News Bureau | 16 Apr, 2018
Industry
body Assocham has said that it
may take at least another three quarters before the problem of twin
balance sheets of banks and highly leveraged corporate firms gets
reasonably resolved, even as the process of resolution of the
companies under IBC reference would pick up pace in the coming
months, said ASSOCHAM.
"Our
own assessment is that it would take another six to nine months
before the banks see revival of confidence to lend afresh as they
would then see reasonable amount of their non-performing assets
(NPAs) get unlocked through a resolution. Besides, with sales growth
expected to witness a revival, the ability to service debt would
improve considerably," the chamber said.
ASSOCHAM
Secretary General Mr D S Rawat urged the Reserve Bank of India to
relax the norms proposed in its February circular as the same are
quite harsh both on the bank as also the borrowers. "These norms
would aggravate rather than solving the problem of NPAs; at this
point of time, both the lenders and borrowers need to be given a
confidence and policy support. As long as there is a willingness to
resolve the problem, all support must be extended. After all, as is
evident from the stressed assets in steel and cement, there is a huge
rush for acquiring the same. This shows there is a tremendous
inherent value proposition and these assets can be turned into first
class performing assets within a few years".
He
said in the coming months, the IBC process would see some refinement,
based on the experience gained so far even as the capacity to handle
the cases would get built up in an institutionalised manner. "Be
it consortium of creditors, debtors, insolvency professionals,
company law tribunals or even higher courts, they would all gain
useful experience and would have some successful precedents to
follow, going forward".
According
to the ASSOCHAM, within India Inc, there is also a growing
realisation that in case the projects are stuck for reasons, there is
a legitimate exit route available before the creditors and
promoters. “The IBC system needs to be supported and made the
best from the global standards with active involvement of the
government, regulators, lenders, borrowers and the judiciary".
Post
the clean-up, the entire corporate governance structure should see a
transformation, raising the standards of internal controls, external
oversight, disclosure and authority of the boards, the chamber noted
with confidence.
