ET Now: What do you have to say on the impact on banks after the changes to the insolvency and bankruptcy code? Some say buyers will have a better credit rating and this will, in turn, help lenders.
Mythili Bhusnurmath: I think he is a little optimistic, because frankly, one does not know whether buyers have the wherewithal. Many of the buyers would not have the necessary experience in the areas we are looking for assets to be sold. So I am a little wary, because I think many of the changes that are being made in the IBC are quite Draconian and, frankly, you have ruled out a whole host of buyers who might otherwise have been able to bring value to the entire process.
I think the government has gone a little overboard. The pendulum has swung from one to the other extreme. In particular, I am talking about the clause that says any account that has been NPA for over a year, the promoters will not be allowed to bid.
Now, an NPA can be the result of factors that are completely beyond your control – coal auctions have been cancelled, the telecom auction has been cancelled and there was a downturn in the global economy – and by removing that entire class of people, whose accounts have turned NPAs, we are really shooting ourselves in the foot. So, we will have to see how it works out, because many of these buyers who are not in this class at all, we have virtually ruled out almost all companies because it is not just the companies themselves but anybody who is even connected to such a company, who has defaulted for a variety of reasons. So I think we have gone a little overboard. We will have to see how it pans out.