Skip to main content

Banks set norms to select bidders for troubled assets

Banks set norms to select bidders for troubled assets
Banks, stung by fear of investigative agencies disrupting their lives even if they follow the bankruptcy process, have evolved a common set of evaluation criteria to short list potential buyers to be admitted in the bidding for assets put on the block under the Insolvency and Bankruptcy Code, said two people familiar with the developments
The ability of the bidders to bring in equity funding, future potential to borrow, past track record of turning around projects are among the criteria evolved after weeks of deliberations, said the people who did not want to be identified. The other criterion that could go in favour of bidders are: higher amount of sustainable debt, shorter duration of the repayment schedule, equity upside for the lenders, allotment of redeemable instruments to lenders and the optional cash flows at the disposal of the bidder.
“As a bank I am interested in getting most of my money back in the short- est possible time and with the least amount of haircut,” said a banker at a state-run bank who did not want to be identified. “With these objectives in mind, who so ever gives me a cheque with a single amount I am happy with it because it will help me get rid of the non-performing loans.”
Bankers, who were haunted by the arrest of their peers in the Kingfisher AirlinesBSE 3.03 % case and the bogey created by the prospect of unscrupulous promoters getting their asset at a steep discount, are turning cautious. Although the Insolvency and Bankruptcy Code provides protection from the gumboots, bankers do not want to take any risk. Banks have also prepared a set of subjective criterion to evaluate the bidder which includes the applicant’s background
Ten days ago, the Act was amended to bar wilful defaulters from participating in the resolution process, while other defaulters can participate only if they regularise their loans before bidding. As things stand, all lenders are unanimous that the highest bidder will have priority over others. “If that is not possible and he says part debt and part restructure, there will be tenure based discount. If lenders have to make sacrifice, then we will see what equity is given to us and what is the bidder’s track record,” said another bank official

The Economic Times, New Delhi, 5th December 2017

Comments

Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Coffee-Toffee, the GST Debate Continues

Hundreds of crores of rupees in the form of taxes ride on the exact categorisation of products Is Parachute hair oil or edible oil? Is KitKat a chocolate or a biscuit? Is a Vicks tablet medicament or confectionery? For the taxpayer and the tax collector, this is much more than an exercise in semantics -hundreds of crores of rupees ride on the exact categorisation.
As the government moves closer to rolling out the goods and services tax (GST) on July 1, many such distinctions are being debated so that no ambiguity remains. Not just that, the government is revisiting old tax cases that were lost over product categorisation, according to people with knowledge of the matter, presumably with a view to making sure that revenue collections can be maximised. “In the past, several tax officers had challenged some of the product categorisations, including those in the retail segment, but lost out in court or at appellate level,“ said one of the persons. “Now we have a chance to go ahead with speci…

Deposit gush:-CA Institute Bats for Special Audit