It has not given bankers the realisations they had hoped for. Now the government has unveiled a new approach even while they are modifying the act.
Two years ago, the landmark Insolvency and Bankruptcy Code (IBC) appeared to have handed a silver bullet to bankers for a quick resolution of the vexed problem of stressed loans. The Act did manage to create a sense of fear among corporate defaulters, but failed to maximise the value of assets for creditors and achieve a time-bound resolution. While it is too short a period to jump to any conclusions, the government changed track a few days ago by giving the green signal to a new five-pronged approach under “Project Sashakt” (or Empowerment). Under this, the government wants to set up one Asset Management Company (AMC) -- a Bad Bank in common parlance, which would take over the stressed assets first, and try and nurse them to health. (Later there could be more AMCs) In one stroke, the government seems to have relegated the IBC, making it a resolution tool of last resort.
The new five-tier resolution structure lists the IBC at fourth place. The first three approaches are outside the IBC and essentially entail dividing the ₹8 lakh crore plus stressed loans into three different buckets – SME, mid-size and large loans. The fifth resolution tool is actually far more ambitious and is about creating a trading platform for bad loans.
Shyam Srinivasan , CEO, Federal Bank, says IBC is the anchor for resolution of bad loans. “Everything else ( AMC, ARC, etc.) is the additional support or enabler for IBC. The bankruptcy code will stabilise in due course,” hopes Srinivasan. “Financial creditors can use the NCLT (National Company Law Tribunal) as a medium but not as the only option,” says Abizer Diwanji, Financial Services Head, EY India. Abizer’s EY provided support to Project Sashakt from structuring, taxation and accounting perspective. The new approach hints that assets with limited turnaround potential will be taken to the IBC.
Esta historia es de la edición August 26, 2018 de Business Today.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición August 26, 2018 de Business Today.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
"Moving to cloud helped us grow❞
What was the problem you were grappling with?
She's Got Time
MORE WOMEN ARE BECOMING WATCH CONNOISSEURS, SEEKING OUT BOTH JEWELLED AND TECHNICAL WATCHES FOR THEIR STYLE AND CRAFTSMANSHIP
RISING STAR
PARUL GULATI IS a name that's been steadily gaining prominence in the Indian entertainment industry after she appeared on season 2 of Shark Tank in 2023. She has become a multifaceted personality who effortlessly transitions between acting and entrepreneurship.
Building on a Legacy
WHEN ZAHABIYA KHORAKIWALA stepped into her role as Managing Director of Wockhardt Hospitals over a decade ago, she confronted formidable challenges that have since turned into achievements.
LEADER IN INNOVATION
AS FEDEX'S PRESIDENT (Middle East, Indian subcontinent and Africa), Kami Viswanathan has a lot on her plate.
WAITING IN THE WINGS
Here are those who missed out as they have not yet completed a year in office; they'll be strong contenders in 2025
A DECENT PROPOSAL
IN TODAY'S WORLD OF TRYING TO CREATE AN EQUITABLE SPACE, BOTH MEN AND WOMEN CONTRIBUTE TO THEIR HOUSEHOLDS. WOMEN ARE ENCOURAGED TO HAVE THEIR OWN SAVINGS POOL AND INVESTMENT ROUTINE. GIVEN THIS, HOW SHOULD FUTURE BRIDES APPROACH FINANCIAL PLANNING?
Women and the STEM Bias
EMPOWERING WOMEN IN STEM WILL NOT ONLY BENEFIT INDIVIDUALS, BUT ALSO STRENGTHEN THE ENTIRE INDUSTRY, DRIVING INNOVATION AND PROGRESS.
ROCKET WOMEN
WOMEN IN INDIA ARE NOT ONLY VENTURING INTO SPACE BUT ARE ALSO STARTING TO SPEARHEAD THE COUNTRY'S EFFORTS IN THE GLOBAL SPACE RACE.
ONE STEP FORWARD
THE NUMBER OF WOMEN INDEPENDENT DIRECTORS IS GROWING STEADILY, BUT IT'S A LONG WAY FROM GENDER PARITY. MUCH MORE NEEDS TO BE DONE TO BREAK THE GLASS CEILING IN BOARDROOMS.