will block efforts by wilful defaulters
to bid for distressed assets in insolvency proceedings, State Bank of India (SBI) Chairman Rajnish Kumar (pictured) said on Monday. Kumar was speaking on the sidelines of a conference on digital banking organised by Ficci
and Indian Banks’ Association.
However, it is a fine line for the banks
whether they can block any effort by a wilful defaulter to bid for his
“There is no place for wilful defaulters
or people who have diverted fund as proved in the forensic audit,” Kumar said at the sidelines of the event, adding even as legally even as the promoters were within their rights to bid for their own firm assets, banks
would put some preconditions such as the bidders “should not be wilful defaulters
and second is the forensic audit which should clear them of any wrongdoing and third is about the quality of resolution plan which is submitted.”
Ultimately, any bid that maximises the enterprise value and is acceptable for the creditors should be accepted. Kumar also cautioned that the recent infusion of capital should not be equated with banks’ ability to take deep haircut. Besides, some sectors are picking up and banks
would ideally want to wait out instead of agreeing on a rate cut.
“If we were to sell steel sector assets a year ago, then there was a question of deep haircuts on those assets. Steel is picking up now and banks
won’t agree on such haircuts,” Kumar said, declining to quantify the haircut banks
would be ready to take. Kumar also said the recent decision for capital infusion in government banks
would save the banking sector and the recent stock market rally in banking stocks was a clear indication of that.