AMN / MUMBAI
Finance Minister Arun Jaitley today assured balance-sheet stressed firms that the key objective of NPA resolution is not liquidation of their businesses but to save them. He said, the objective is to make sure that these valuable assets are preserved.
Addressing an insolvency summit organised by Confederation of Indian Industry in Mumbai, the Minister said, the new insolvency law has significantly reversed defaulting debtor-creditor relationship. Explaining the rationale for the new insolvency and bankruptcy code,IBC, he said, this was necessitated by the failure of debt recovery tribunals to effectively perform their duty after the initial success.
Mr Jaitley added that the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act had succeeded in getting down NPAs drastically in the initial two-three years. Calling for speedy and time-bound resolution of the bad loans issue, the Finance Minister expressed hope that the mandated timelines will be adhered to for effective implementation of the Act.
The less effectiveness of DRTs led to enactment of the new law, the minister noted.
When enacted, the Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act would succeed in getting down NPAs drastically in the initial two-three years, he said.
Mr Jaitley also said the new regime, under the IBC, has significantly reversed the defaulter-debtor relationship and noted, “We lived in a system for many years which protected debtors and allowed assets to rust away.
Speaking on the occassion, RBI Governor Urjit Patel called for recapitalisation of state-run banks to help them resolve the NPAs issue in a time-bond manner. He said, bad loans at 9.6 per cent of the system is not acceptable. The government and the RBI are working together to comprehensively address the issue through a multi-pronged approach, he added.