Kotak Mahindra Bank MD Uday Kotak, who has never shied away from expressing his angst against banking sector issues, has said that even as the newly-adopted Insolvency and Bankruptcy Code has challenges, the government is "acting quickly when quick changes are required".
Kotak Mahindra Bank MD Uday Kotak, who has never shied away from expressing his angst against banking sector issues, has said that even as the newly-adopted Insolvency and Bankruptcy Code has challenges, the government is “acting quickly when quick changes are required”. In an interview with ET Now, Uday Kotak said that the IBC law is positive for the long-term health of the banking system and that it is evolving with time.
The top banker, however, added that it is the 270-day deadline that is posing a challenge to the lenders. “Bhushan Steel case is a testament to IBC’s success,” he said. Last month, IBC witnessed its first successful resolution when Tata Steel bought bankrupt Bhushan Steel for Rs 36,400 crore. It was soon followed by Vedanta’s buyout of bankrupt Electrosteels Steel. Both these companies were the part of Reserve Bank of India’s ‘Dirty Dozen’ constituting 12 big accounts with 25% of India’s total NPAs.
On the economy, Uday Kotak made an interesting comment the micro-macro picture has switched places. “Three-fours years back macro was doing well and micro was weak. Now, the scenario has changed. Macro is getting challenging and micro is improving,” he said.
Uday Kotak had earlier praised the Narendra Modi government for bringing an amendment via the Ordinance route to bar wilful defaulters, defaulting promoters and related parties from the bidding process of the IBC. He said what loan defaulters “really needed was the fear of losing the company”.
The Union Cabinet brought-in three bid urgent changes taking the Ordinance route. First, it was the Section 29A, which barred loan defaulters from the bidding process; second, it was the approval to treat homebuyers at par with financial creditors; third, to provide exemptions to micro, small and medium-sized enterprises. All three big changes in the IBC law has been largely praised by economists and industry and banking experts.
Earlier, sharing a report on the impact of high oil prices on India’s GDP, Uday Kotak had said that macro headwinds were there even as micros were getting better. He also said that the Indian bond markets are very sensitive to oil prices. He said that the price of oil has significant implications for current account, fiscal situation, and on inflation