Yashwant Sinha , India's former minister for finance and external affairs, stunned ARCON-2015, a summit of asset reconstruction companies in New Delhi, by likening wilful defaulters to criminals and dacoits, suggesting they should be dealt with accordingly. Wilful defaulter is a promoter who raises debt without any intention to pay back.
The most recent attempt to declare a promoter a wilful defaulter was by United Bank of India against UB Group Chairman Vijay Mallya. The latter, however, managed a stay order against the move.
Sinha was speaking as chief guest at the Assocham event for asset reconstruction companies (ARCs).
Sinha was the finance minister when the SARFAESI Act, which enables setting up of ARCs in the country, came into being.
"One category of borrowers is those who come with the intent to cheat. They are wilful defaulters. He is a criminal. He should be dealt with just as you deal with a dacoit," Sinha said.
Sinha also came down heavily on banks for ever-greening of assets, which could be the major reason behind the system now dealing with over Rs 7 lakh crore of stressed assets, up 10 times from the time the SARFAESI Act came into being 13 years ago.
Sinha asked banks to stop ever-greening of assets and pass on stressed assets to specialist ARCs that are set up for the purpose under SARFAESI. "We have banks that are riding their high horses. It is not for banks to get into direct restructuring of assets and business. They should restructure loans," Sinha suggested. "Don't approach ARCs from a position of strength."
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