Taking loan is a common and major requirement for all of us. We all do that and it becomes more essential when it comes to the corporates. It will improve the chances of resolution if in case the loan go bad. And on this, on a discussion on Mitigating risks, a bank said-Turning the NPA challenges into an opportunity”. Considering that the nitty-gritty of the Insolvency and Bankruptcy Code has now been ironed out, more investors will be interested in stressed asset investments in India.
However, the managing director of SBI, state bank of india said that
all the challenges of these resolution process are large size of
creditor community especially in the loan assets. In her words- “Adding
to the complication is the multiple classes of lenders. For example, you
are familiar with large housing finance companies (HFCs) we are trying
to resolve with multiple classes of creditors that are governed by
multiple regulators. Our big challenge is in managing this.The other
challenge is the multiple banking arrangements that were created to
ensure the flow of credit to needy sectors. But this has further
complicated the situation at the resolution stage. There are multiple
lenders with multiple security structures. How do you handle this kind
of alphabet soup when you need to find a resolution? There are huge
conflicts of interest,”
The whole discussion has been about the same and about whether the security will make the payments to their priority or not.