Veteran banker and Kotak Mahindra Bank CEO (CEO) Uday Kotak on Monday said it’s “time for policy relook at financial sector resolution” through the NCLT mechanism.
Reliance Capital, Srei experience signal poor recovery below liquidation value for creditors, he said in a tweet.
Kotak, who stepped down as the Chairman of the board of IL&FS last year, said while recovery ratio is better in the case of IL&FS, the legal process is taking long.
“NBFC resolution. RCap, Srei experience signal poor recovery below liquidation value for creditors. NCLT process is also tardy whether IBC or otherwise. In IL&FS too while recovery ratio is better, legal process takes long. Time for policy relook at financial sector resolution,” tweeted Kotak.
The Centre had in October 2018 taken control of debt ridden IL&FS and had replaced the old board with the new board led by Kotak. The Group had over Rs 99,000 crore of debt at the time. Rs 55,000 crore debt of IL&FS was resolved by the time Kotak stepped down.
Earlier this month, Adisri Commercial Private Ltd, the erstwhile promoter of Srei Infrastructure and Finance, has moved the Kolkata-bench of National Company Law Tribunal (NCLT) challenging the RBI appointed administrator Rajneesh Sharma’s decision to reject its settlement application.
NBFC resolution. RCap, Srei experience signal poor recovery below liquidation value for creditors. NCLT process is also tardy whether IBC or otherwise. In IL&FS too while recovery ratio is better, legal process takes long. Time for policy relook at financial sector resolution.
The erstwhile promoter proposed to settle dues of around Rs 32,000 crore to the creditors through a mix of an upfront cash and other financial instruments over a period of five years.
Earlier this month, the National Company Law Appellate Tribunal (NCLAT) allowed a petition filed by lenders of Anil Ambani-promoted Reliance Capital (RCap) seeking another round of auction for the debt-ridden company undergoing insolvency process.
A two-member bench of the appellate tribunal set aside an order passed by the NCLT. The tribunal said the Committee of Creditors (CoC) has the power to negotiate and call for a higher bid.
The NCLAT permitted the CoC to continue with the challenge mechanism and invite bids after two weeks. The NCLAT order came on a petition filed by Vistra ITCL (India), one of the lenders of Reliance Capital, challenging an order of NCLT which restricted further auction of the bankrupt firm. Reliance Capital has a consolidated debt of about Rs 40,000 crore.
With inputs from PTI