Letters: Tap alternative skills

The article by Jaimini Bhagwati and M Suheb Khan, “Public sector banks’ tale of debt overhang and ARCs” (May 18) makes for interesting reading. As a former senior executive of a lending institution and having dealt with non-performing assets (NPA) (acquisition and resolution through a corporate entity) for the past decade or so post retirement, I can say that the system of offloading NPAs and acquisition is yet to be streamlined.

Data room is made available for a brief period, that too with limited records. Due diligence calls for greater involvement and vigilance, particularly to determine pricing. That an asset reconstruction company is a business model and needs to be viable has not sunk in for key players in the field.  Apart from under-provisioning based on value of security, underlying business value and collaterals etc, time value should also be considered in pricing. Here, time value is not taken into consideration at all. Time value has also become subjective due to litigation uncertainties — too many adjournments, appeals — non-cooperation of promoters of borrowers, claims and counterclaims etc.

In the actual resolution process, one comes across complications, which seem unimaginable at the time of sanction or assignment to ARCs. To untie this knot, enormous efforts are needed.  Banks, particularly those in the public sector, should realise that availability of skilled manpower to tackle this problem is limited. They should encourage alternative resources such as assigning to ARCs at a price with a sustainable business model, so that they can concentrate on the lending business for increasing productivity, generation of employment etc. The system should tap alternative skills after properly verifying the skill of people, their antecedents etc.

P Krishnan   Bengaluru

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