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To Resolve NPAs
To Resolve NPAs
Hindustan Asset Reconciliation and Securitisation Limited (HARASL) is required to take up the aforesaid challenges for effective and speedy action by invoking the applicable laws and other measures by bringing into play their expertise in asset resolution.
RBI guidelines for ARCs provide a strict time frame of 5 years (including 1 year planning period) for resolution, thus bringing in a sense of urgency for the ARCs, right at the acquisition stage itself. Debt aggregation in the hands of ARCs not only releases the bandwidth of the banks/FIs for their core activities and recycling of the capital available to the banking system, but also makes it worthwhile for the lenders to cooperate with the ARCs, given the position of strength and expertise with which the ARCs tackle the errant borrowers.
Given the industrial nature of most of the large NPAs and lack of significant exposure to the real estate sector, restructuring either with the existing promoters or business sale to strategic investors is the key for value maximisation for which the ARCs are uniquely placed, given their expertise and tight time frame prescribed by RBI.
Accordingly, ARCs are in a strategic position to bring stability to the financial system and facilitate revival of economic growth. The conducive factors in favour of ARCs are legal empowerment and booming economic conditions potent with possibilities of unlocking the value of collateral based loans. ARCs with pragmatic approach towards debt restructuring and flexibility to explore multiple resolution strategies in a dynamic framework, can achieve successful resolution.
