The recent SBI led SAMADHAN of
over Rs 70,000cr of stressed assets in the power sector, makes interesting
reading especially in view of the furor raised by the Power Utilities to the 12th
Feb 18 circular of the RBI. That circular gave powers to Banks, either singly
or jointly to resolve the debts in a manner quite akin to the IBC code. Further
for stressed assets in excess of Rs 2000cr it even set similar deadlines. Power
Utilities had got a stay from the Supreme Court against this Circular.
..And here we have Rs 70,000cr
covering seven accounts being settled, with three of the Companies handed over
to one Group.
The “interesting” aspects for me are twofold:
The 12FEB18 Resolution Framework
was clearly an attempt to make the Banks proactive, and resolve the debt
problem early, instead of entering into the IBC mechanism at a subsequent
stage. A laudable objective, for if
problems can be solved “within the family” why risk time and reputation facing
a legal mechanism? Except, that the manner of resolution is nowhere as
transparent as the one the IBC provides for. I am not sure whether the RBI
Circular provides for advertisement to seek bids, or the Bank Managers and the
debtors allowed striking deals on their own? I do not for a moment doubt the
fearless independence and the integrity and sincerity of the Bankers to find
the optimal solution in the best interests of the shareholders of the Bank. After
all they need to get the deal vetted by one of the three Rating Agencies. Absolutely! But then what if the losses (“haircuts”
as the word goes) suffered by the Lenders from amongst the Public Sector Banks
are then made up by the Government from the tax payers money? Would a certificate
by one of the three Rating Agencies be an adequate clean chit? We are all aware
of the performance of these noble entities.
