As a result of the crisis of the IT & FS, the Indian government, RBI and SBI are striving to stabilize the system "very quickly", and the situation should probably become normal again within a few weeks said SBI Chair Rajnish Kumar. right here.
Kumar said that leasing of infrastructure and financial services (IL & FS) was a "single institution" operating in the field of financing infrastructure and construction.
It's an engineering, procurement and construction (EPC) contractor, who owns the assets as well as his finances – it was a 3-in-1, said Kumar, adding that it's banks or non-bank financial companies (NBFC), if they finance infrastructure, they have had problems in India.
"The infrastructure, especially the BOT model (construction – operation – transfer), has posed many problems, even to the banks. We ourselves have suffered from infrastructure funding, "Kumar said at an interactive session organized on the occasion of the 9th conference on" New India "held at the Indian Consulate under the auspices of the Consul General. Sandeep Chakravorty.
The conference series is organized by the Consulate in partnership with the US-India Strategic Partnership Forum (USISPF).
In response to a question about IL & FS and the impact of the shadow banking system on the Indian economy, Mr. Kumar stated that, since it was an NBFC, it had a contagion effect .
"Due to the failure of IL & FS, mutual funds are under pressure. Companies that provided liquid funds to mutual funds became very cautious. In turn, mutual funds have become cautious about their investments, "he said.
Kumar added that following the IL & FS licensing crisis, the SBI is strongly strengthened.
"This is how we try to stabilize the system and remedy the situation. RBI has announced measures to improve the liquidity of NBFC. The government, RBI and SBI – we are all trying to get the system to stabilize very quickly.
"I think it's a matter of time – two weeks when things get back to normal," he said.
IL & FS and its subsidiaries have recently made several debt repayments due to a liquidity crisis. He needs an immediate injection of capital of Rs 3,000 crores and is also considering a rights issue of Rs 4,500 crores.
In March 2018, the company owed more than 91 billion RAR to banks and other creditors. On October 1, the government replaced the board of IL & FS and appointed a new board, whose executive chairman is the banker Uday Kotak.
Regarding the insolvency and bankruptcy code, introduced in 2016, Mr Kumar said that he considered that it was the most important reform undertaken by the current government.
"It's a new law, a new process. So, obviously, there are some failures, because there are problems concerning the interpretation of the provisions of the code, "he said.
It is very difficult for existing promoters to believe that there is a law and a real threat to losing control of the business. This has never happened in India in the past. That's where the battle is, but it was very necessary, he said.
He said that in the future, the dispute would be resolved and that the resolution would be taken within 180 to 270 days.
"For this process to be successful, it is important for cases to be referred to as soon as possible. It is clear that there is a paradigm shift in the relationship between creditors and debtors in India, "he added.
He said the Insolvency and Bankruptcy Code worked very well, but one had to be careful before exercising it. The threat works much better than the actual resolution. "