Even as corporate bad loans were brought under control, non-performing assets (NPAs) in small-ticket loans to retail and small businesses are likely to rise in the coming quarters, said experts at the Mint Annual Banking Conclave held on 15 December. “In the large corporate sector, things have almost stabilized. Fresh NPAs will be few and far between in the coming years. But covid stress has built up in MSME and retail sectors," said Pallav Mohapatra, managing director and CEO, Asset Reconstruction Co. (India) Ltd. “In the case of retail, repayments are dependent on salaries and during covid and lockdowns there were layoffs, salary cuts and at times people were not paid on time. In case of MSMEs (micro, small and medium enterprises), their manufacturing activity had stopped and they were not getting workers. If their activity is affected even for 3-4 months, it really impacts cash flows as they do not have other sources to raise money than debt.       

The Reserve Bank of India rejected Religare Finvest Ltd's proposal to rename itself Care Financial Services and declined to new management status to the existing management - a move that would derail debt restructuring of the finance company, said people aware of the matter. As per the RBI's regulations, lenders cannot restructure loans of borrowers tagged as fraud, unless there is a change in management. Lenders have tagged its parent company Religare Enterprises Ltd (REL) as fraud. Religare Finvest itself filed a case of financial irregularities against REL and have also proposed a debt recast plan with REL as its promoter company. "There is a dichotomy here and this may be a reason for the banking regulator to reject the change in management status," one of the persons quoted above said.

The next session is on Leveraging analytics for asset resolution and managing NPAs: 5.20 PM: Aniruddha Sen, Partner, Trilegal on IBC: "There are some gaps with the IBC but on paper, it's a good law. The biggest issue is the judicial system. The availability of tribunals and justices to apply the law correctly. There is a case for more. Overall, IBC is a case of good law but it has been frustrated by the fact that its novel, which is why I think it has led to slightly less than expected performance." 5.25 PM: Pallav Mohapatra, CEO, Arcil, on NPAs: "After 2014, the volume of NPAs went up in the large corporate sector, now almost all things have stabilised. The fresh NPAs coming out from the large corporate sector will be few now. But the stress grew in the Covid time because of the lockdown in MSE and retail sector. There might be one more outburst of NPAs. Whether it will be as bad as in the 2010 scenario, there is no definite answer, but I feel there will be one more flare-up of NPAs in the coming future."

Asset Reconstruction Company of India (Arcil) joined the race to acquire debt of Chenani-Nashri Tunnelway Ltd (CNTL), offering 27 per cent recovery to private lender IndusInd Bank NSE 0.80 %, people with knowledge of the matter told ET. Arcil’s Rs 208-Crore full cash offer for IndusInd Bank’s Rs 752-Crore unsecured debt in the country’s longest road tunnel in Udhampur in Jammu and Kashmir has triggered a Swiss Challenge auction, they said. Under this method, interested parties can bid for the debt by quoting a better price, but Arcil will get an opportunity to match the best bid and close the deal. The private bank has invited expression of interest from potential buyers to be submitted on Thursday, December 16, according to a notice issued by the bank on its website on Tuesday.

IRP Pinakin Shah has admitted Rs 7,534.6 Crore in claims from 27 financial creditors including HDFC Bank, Axis Bank, RBL, Aditya Birla Finance, IndusInd Bank, Life Insurance Corporation, State Bank of India, Punjab National Bank, Punjab & Sind Bank and Karnataka Bank. In October, Shah received 16 expressions of interest (EOIs) from applicants including Varde Capital-backed Aditya Birla Asset Reconstruction Company (ARC) in partnership with Easygo Textiles, and Avenue Capital-backed Asset Reconstruction Company of India Ltd (Arcil) under the bankruptcy process. Edelweiss Alternative Assets Advisors Ltd, Asset Reconstruction Company of India, Prudent ARC, Ludhiana-based Trident Ltd, Bengaluru -based Himaksinka Ventures, Punjab-based Lotus Hometextile, Mumbai-based Indocount Industries and Nitin Spinners were also in the race.