REITs-INVITs to rescue cash from NPAs

The Indian Government, policy makers and banks with non-performing assets (NPAs) have demonstrated collective will in tackling the stressed assets in the banking sector by seeking out different solutions, said Sunil Sanghai, chairman of the National Committee on Capital Markets in the Federation of Indian Chambers of Commerce and Industry (FICCI).

Real Estate Investment Trust (REITs) and Investment Trusts (INVITs) are among the solutions and tools being promoted to manage the stressed assets, valued by some estimates between US$150-$250 billion.

“There is a proper and very structured regulatory framework which has been put in place which is not only helping assets to get restructured but also investors to take investment decision for participating in the stressed assets,” assured Sanghai.

The framework through IBC allows investors, including foreign investors, to participate in the stressed assets, he pointed out at the conference on “Insolvency and Bankruptcy Board of India” held in Singapore on 6 June 2019.

There is also a proactive approach for the bankers and lenders to offer assets before they are declared stressed and heads for bankruptcy, said Sanghai of the assets that are coming out of indebted and cash-strapped businesses.

“If there are signs of stress well before bankruptcy, the bankers and lenders can start inviting investors and look at restructuring which gives a new opportunity for investors,” said Sanghai who is also founder and CEO of NovaDhruva Capital Pvt Ltd.

Sunil Mehta, Chairman, Indian Banks’ Association and MD & CEO, Punjab National Bank, illustrated the paradigm shift that IBC has generated. NPAs are not just the problem of banks anymore, corporate debtors are equally concerned.

The insolvency law which was spread over many legislations has been very effectively drawn together under IBC and the implementation by IBBI has been very swift, said Mehta in his address at the conference “New Paradigm for Stressed Assets”.

“IBBI has been very receptive in changing the provisions, where required. This is the most commendable law for banks, and the robust banking system would propel the economy,” said Mehta.

G K Singh, Joint Secretary, Ministry of Corporate Affairs, in his Special Address at the Conference, pointed out that the progress under the Code has been outstanding and Government has responded swiftly to facilitate implementation through amendments and process improvements.

NCLT’s infrastructure is also being strengthened and for continuous improvement, Ministry of Corporate Affairs’ Insolvency Law Committee has been made a Standing Committee with representation of stake-holders’ to fine tune policy decisions.

It was further announced that the cross-border insolvency and individual insolvency are under consideration.

The Conference was organised by FICCI as part of the Roadshow on ‘Insolvency and Bankruptcy Code of India – New Paradigm for Stressed Assets’ in Singapore on 6-7 June 2019.

The Roadshow also includes meetings with focused groups of potential investors and professional firms.

These meetings offer an opportunity to understand the details of the insolvency reforms and investment options and opportunities in stressed assets in India with the policy makers, regulators, leading law firms and consulting firms, and financial intermediaries, said FICCI. Fiinews.com