Twin balance sheets problems nearing resolution in 3 quarters: ASSOCHAM

It may take at least another three quarters before the problem of twin balance sheets of banks and highly leveraged corporate firms gets reasonably resolved, even as the process of resolution of the companies under IBC reference would pick up pace in the coming months, said ASSOCHAM.

"Our own assessment is that it would take another six to nine months before the banks see revival of confidence to lend afresh as they would then see reasonable amount of their non-performing assets (NPAs) get unlocked through a resolution. Besides, with sales growth expected to witness a revival, the ability to service debt would improve considerably," the chamber said.

ASSOCHAM Secretary General Mr D S Rawat urged the Reserve Bank of India to relax the norms proposed in its February circular as the same are quite harsh both on the bank as also the borrowers. "These norms would aggravate rather than solving the problem of NPAs; at this point of time, both the lenders and borrowers need to be given a confidence and policy support. As long as there is a willingness to resolve the problem, all support must be extended. After all, as is evident from the stressed assets in steel and cement, there is a huge rush for acquiring the same. This shows there is a tremendous inherent value proposition and these assets can be turned into first class performing assets within a few years".

He said in the coming months, the IBC process would see some refinement, based on the experience gained so far even as the capacity to handle the cases would get built up in an institutionalised manner. "Be it consortium of creditors, debtors, insolvency professionals, company law tribunals or even higher courts, they would all gain useful experience and would have some successful precedents to follow, going forward".

According to the ASSOCHAM, within India Inc, there is also a growing realisation that in case the projects are stuck for reasons, there is a legitimate exit route available before the creditors and promoters. The IBC system needs to be supported and made the best from the global standards with active involvement of the government, regulators, lenders, borrowers and the judiciary".

Post the clean-up, the entire corporate governance structure should see a transformation, raising the standards of internal controls, external oversight, disclosure and authority of the boards, the chamber noted with confidence.

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