Bankers Find It Tough To Sell Assets Of Defaulters

Defaulting corporates may be losing court battles with banks but they are not in a mood to give up. Banks and financial institutions are not being able to recover money even after getting green signal from debt recovery tribunals (DRTs) as there are no buyers for property, plant and machinery of the defaulters.

"There have been about 85-90 cases where we have received recovery certificates from the DRT. But the recovery officers have not been able to get money as there are hardly any buyer," said the chairman of a financial institution. According to him, the corporates are ganging up to prevent sale of property.

"If there are bids, they are ridiculously low. There are also instances when a factory comes under the hammer but there is no buyer. These auctions have become a farce as the promoters of defaulting company make sure that either nobody comes forward to buy out the factory or the bids are put in at such a low level that they are not acceptable," said a FI chief.

He also cited the instance of a big company where the banks and institutions decided to remove the defaulting promoter but could not do so and half a dozen suitors including overseas outfits who evinced interest were "driven away" by the promoters.

"It is extremely difficult to recover money from the mid size and big corporates even after a favourable judgment from the DRT. As far as small enterprises are concerned, there is hardly any taker because of the slowdown," said a Mumbai-based senior banker.

In the face of corporate resistance, some banks are planning to appoint external agencies to seize and sell corporate property once the decree is given in their favour.

"Even though we have a recovery cell run by a general manger, it is difficult to work in an effective way when it comes to big defaulters. The cell is tackling the small borrowers well. But to recover big sticky loans we are in the process of appointing specialised seize and sell agencies which will work on a commission basis with the bank," said the chairman of a large public sector bank.