Mumbai, Feb 20 (PTI) NCP supremo Sharad Pawar today hit out at the Reserve Bank for being "reckless" with its new NPA order that has ended loan restructuring provisions, even though Rs 2-trillion worth of assets are still under the scrapped dispensation.
Pawar, a Union former agricultural minister, also decried the central banks February 12 notification on NPA management that puts "excessive faith" in the newly-formed bank bankruptcy courts to resolve the bad assets.
"The RBI circular cancels all existing schemes of debt restructuring with immediate effect. This is quite reckless as it jeopardises the resolution schemes that are in advances stage of completion," the veteran politician and many-time state chief minister said.
The former defence minister also said almost Rs 2 trillion worth of stressed assets are being resolved under the existing schemes like the debt restructuring, S4A and strategic debt restructuring and each one of these loans has a definite time period.
"Either the existing admitted cases should be permitted to complete the allowed resolution period or a fixed deadline of at least 90 days hereafter should be specified," he demanded.
Pawar said invoking the insolvency and bankruptcy provisions is disruptive and "destroys value for all stakeholders", which makes it imperative that it is used as the final tool.
He also said even though Rs 3 trillion of dud assets are at various NCLTs, only a handful of resolutions have met with success at the special courts and therefore accused the central bank of "excessive faith" in it.
Slamming the new provisions like default being counted from the first day, he said such a a stress on having all the lenders on board for resolution plans and difficulties for banks to write-back provisions.
Pawar said the new rules, which drastically changes the NPA resolution framework, were done without notice and any discussions with the stakeholders.
He also sought an improvement in the new framework on debt restructuring based on this feedback, claiming that the current one will hurt the job-creating small businesses, agri processing businesses and commodity sectors. PTI MR AA BEN BEN
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