Although new cases under India’s insolvency law have been suspended for six months, lenders have the RBI’s stressed assets resolution framework released on June 7 last year to appeal, said Rajnish Kumar, chairman of the State Bank of India (SBI).
In June, President Ram Nath Kovind signed an ordinance suspending the Insolvency and Bankruptcy Code (IBC) for a period of at least six months from March 25 to protect companies from being dragged into court. of bankruptcies.
“That shouldn’t matter because in any case, the Reserve Bank of India (RBI) resolution framework gives a window of about six months to arrive at a resolution framework and only if the lenders are not successful in that. period, they have the option of taking the borrower through the DRT or NCLT legal process, “Kumar said at an event organized by the industry body Ficci on Thursday.
While DRT stands for Debt Recovery Tribunal, NCLT stands for National Corporate Law Tribunal.
Kumar said there is sufficient regulatory space available to address any stress outside the legal framework. “That is where the RBI framework of June 7, 2019 comes into play and now a special window has also been provided,” he said. “Even outside of the legal process, the RBI’s regulatory framework provides rules and regulations and how businesses as well as the stress of retail.”
According to Kumar, there are several estimates about the opportunity in stressed assets due to covid-19. However, he said he has a slightly contrary opinion but does not want to disappoint potential investors.
“From the analysis of my own loan book, I think the opportunity may not be as great as it is intended. That would be a happy situation for the country and we should all wish that this opportunity remains small, “said Kumar.
Meanwhile, he also said that SBI is a beneficiary of IBC as it has a “dubious distinction” of having the largest stressed portfolio of assets in the country. “Not in terms of a percentage of our total portfolio, but because of its absolute size, our portfolio is very large, which is almost ₹1.5 trillion, “Kumar said.
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