After India’s large private banks such as Axis bank and Yes Bank reported large divergences in gross NPAs to the tune of Rs 5,633 crore and Rs 6,355 crore respectively in the September quarter, Nilesh Shah of Kotak AMC says that results were shocking to analysts and the markets. In an interview to ET Now, Nilesh Shah, Managing Director of Kotak AMC said, “Whatever numbers we’ve had so far, were obviously shocking to the street and analyst community by virtue of this divergence.”
Private sector banks have fallen under the RBI scanner, after the apex banks tightened regulations concerning NPAs earlier this year. HDFC bank too said the Reserve Bank of India has asked it to classify a contentious loan as a non-performing asset (NPA), which had led to a jump in its provisions in September quarter results declared earlier last week.
Sharing his observation Nilesh Shah said, “ But at the same time, we must remember that all NPAs which are provided for are not necessarily written off from a recovery point of view. There is always a possibility to liquidate assets and recover some portion of your loan. Today, there’s a fast track mechanism to for settling your recoveries or your dues. If we can make that work, it can result into shift of ownership of a company from weak hands to stronger hands,” he told the channel.
While Axis Bank and Yes Bank have reported huge divergences in Gross NPAs,Chanda Kochhar of ICICI bank said that the bank did not report any divergence on that front, as the RBI audit is not yet fully complete. Nilesh Shah also said that the promoter should be held accountable in case a company goes into liquidation. “In India, what we have seen is the promoters never go bankrupt, it’s only their company which goes bankrupt. Its up to the judiciary and regulatory system to prove that wrong and ensure than if the company goes bankrupt, the equity shareholders including the promoters go bankrupt,” he told in the same interview.