Promoters of stressed assets should be allowed to bid under the Insolvency and Bankruptcy Code in case they are not wilful defaulters and the company has suffered on account of sectoral reasons, CII President Rakesh Bharti Mittal said today.
The government has prohibited promoters of loan-defaulting companies from bidding under the insolvency process citing ethical reasons.
“Where there is no wilful default or fraud, my view is that the promoter should be given a chance (to bid) if the loan default is due to stress in the sector,” the new CII president said.
He further said the government is seriously considering this issue “but we have to see what finally comes out”.
Terming the rising non-performing assets (NPAs) as serious problem, Mittal said if it is because of the wilful default, the government should take a strict action.
However, if the NPAs are on account of stress in the sector, there is a need to address the problem in an amicable manner in which bankers would have to take hair cut.
Mittal also made a strong case for reducing interest rates by 100 basis points or 1 per cent to help the industry which is reeling under the burden of high interest rates.
He suggested that the RBI should do away with the provision of one-day default for recognising NPA as it was a too “harsh”.
Non-performing assets in the banking sector were over Rs 8.31 lakh crore at the end of December 2017.
Replying to a question on taxing farm income, the new president said that the government could consider imposing income tax on large farmers.