Insolvency & Bankruptcy Code to be main tool for bank debt resolution
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While some of the banks have shown their keenness in pursing the plan proposed by a committee headed by PNB chairman Sunil Mehta, which prepared Project Sashakt, a section in the government believes that the move will once again give discretionary powers to bankers, something that the IBC has done away with.
"Things like the inter-creditor agreement (ICA) are good elements of the report, which banks have decided to adopt and the government too does not have a problem with. But the finance ministry is not favourably inclined towards the AMC concept," said a source, who did not wish to be identified.
The committee had submitted its report to the finance ministry a few months ago and there has been little movement beyond ICA. The government is distancing itself too, saying the entire arrangement was between banks and it did not have anything to do with the report or its implementation.
Sources told TOI that the government was of the view that bankers were not wellequipped to manage corporate assets. "It is best left to the owners. What is the need for bankers to get into it? They have no experience in doing that. It is best to take it through a legally laid-down process, which is beginning to show results," a source said.
Project Sashakt was seen as an alternate mechanism to push through resolution of large assets and improve recoveries for banks, which have to deal with ARCs that offer low payouts. The idea was to push through resolution during 180 days and with AMCs managing the assets and banks as partners, the panel had hoped that lenders would be able to realise better value. #casansaar (Source - TNN, Economic Times)
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