Former State Bank of India chairman Arundhati Bhattacharya on Friday said that government's ordinance to amend the Insolvency and Bankruptcy Code (IBC) to bar promoters from bidding will not lead to lack of bids.
Former State Bank of India chairman Arundhati Bhattacharya on Friday said that government’s ordinance to amend the Insolvency and Bankruptcy Code (IBC) to bar promoters from bidding will not lead to lack of bids — a concern analysts have been raising. Calling the idea of promoters bidding for ownership of their own company at a discounted price a “moral hazard”, Arundhati Bhattacharya said at the FE Best Bank Awards, “None of the resolutions took place because of the moral hazard. There will be enough bids. We need more trust in the system.”
She further said that nowhere in the world such policy existed but in India where there has been deep distrust in the banking system, the insolvency ordinance was needed to bring trust back in the system. “The same people who could not run companies can bid for it at a lower price. It was leading to moral hazard. The step was taken because of genuine reasons. In India, what has happened was a deep distrust. This ordinance is an expression of that distrust,” Arundhati Bhattacharya said.
The Narendra Modi government last month passed the Insolvency and Bankruptcy amendment to bar promoters, defaulters, and wilful defaulters from bidding during the insolvency process through the ordinance route as part of resolving the banking crisis. The government has also announced Rs 2.11 lakh crore for bank recapitalization.
FE Best Bank Awards: Arundhati Bhattacharya is Banker of the Year
The job of Arundhati Bhattacharya as the chairman of State Bank of India (SBI) has never been easy at the best of times. But, even under immense stress, Arundhati Bhattacharya has been courage personified, never afraid to speak her mind, her voice always one of reason. In a big compliment to her, former Reserve Bank of India (RBI) governor Raghuram Rajan said he always listened to her suggestions. The year 2015-16 was probably the most difficult time for state-owned lenders with the RBI initiating a big clean-up of banks’ books. Despite the enormous stress it would have entailed, Bhattacharya showed admirable equanimity taking the clean-up in her stride. She never let it come in the way of SBI’s growth path, making sure the bank didn’t lose sight of its long-term goals. The FE Best Banks jury — chaired by S Ramadorai and comprising R Shankar Raman, Leo Puri, B Mahapatra and Sharad Sharma — was convinced she had done an excellent job under very trying circumstances and had no hesitation in awarding her ‘Banker of the Year’.