“We have the dubious distinction of having the largest distressed assets portfolio in the country but not in terms of the percentage of our loan portfolio,â Kumar said during a Federation of Indian Chambers of Commerce and Industry conference on Thursday.
While initiation of fresh insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) had been suspended for six months, Kumar said banks always had the Reserve Bank of Indiaâs (RBI) June 7 circular on stressed asset resolution framework to fall back on.
âThat should not matter because in any case, the resolution framework of RBI gives a window of about six months to arrive at a resolution framework and only if lenders do not succeed in that period, they have the choice to take the borrower through the legal process of DRT (Debt Recovery Tribunal) or NCLT (National Company Law Tribunal),” Kumar said
On June 5, the government promulgated an ordinance suspending sections 7, 9 and 10 of the IBC for six months from March 25, extendable by up to a year, in order to protect companies from being dragged to the bankruptcy court for defaults on account of the pandemic.
The government is currently trying to pass the provisions of the ordinance through an amendment bill in Parliament.
Speaking on the theme of the conference, âOpportunities for Investment in Stressed Assets in Indiaâ, Kumar said there were various estimates of the opportunities in stressed assets in the country but it was not as large as it was being made out to be which was a good thing for the economy.
âFrom the analysis of my own loan book, I feel that the opportunity may not be as large as it is being made out to be. That would be a happy situation for the country and all of us should wish that this opportunity remains small,” said Kumar.