Mumbai: The bank comes out of a bad loan chaos through provisions made from new profits and capital.
However, the dead weight of these old accounts continues to be in their books as a national asset reconstruction company (NARC) or ‘Evil Bank’ announced in last year’s budget not taking off and some reforms proposed for the company’s reconstruction of private assets (ARC ).
Still delayed.
New buyers for bad loans are also needed because the level of recovery slips and worse loans can appear in the future.
The recovery rate of a bad loan, which jumped from the pre-bankruptcy code of 26% to around 39% in FY21, once again slipped thanks to the delay in bad loan resolution.
In addition, reducing cash requirements upfront from 15% to 2.5%, the RBI panel has proposed the main reform for the arc.
They include allowing arc to send a resolution plan for bankrupt companies.
“The NPA wave will then come from the MSME and retail sectors that are stressed after the available restructuring window closed To subscribe to ARC security acceptance, as recommended by the designated RBI committee recently, “said Hara Mishra Day, Director, UV Arc.
According to Edelweiss Arc MD Bansal RK, there is a need to stop the minimum alternative tax (section 115JB) which is currently imposed on companies whose applications under the IBC provisions have been received by NCLT, until then the prospect of the rotation company considers the resolution plan submitted to NCLT.
“This will benefit in bringing all losses of books ahead and depreciation without the dissort to depart in the coming years, thus making the acquisition of companies that are depressed more professly,” Bansal said.
Company buyers go bankrupt face tax demands if the price they pay less than a fair market value or price listed.
Because speculators can increase prices and even companies go bankrupt with zero net worth, market prices do not reflect the underlying value.
“The authorities must also focus on additional challenges that influence the majority of the process of resolving the company’s bankruptcy (CIRPS) such as being a hunger of cash which leads to a huge delay.
There is also a lack of clarity in the position of temporary investorship regarding what financial information has and the guidelines Obviously for loan institutions in this space.
In addition, the framework for fast litigation release for timely settlement of the CIRP process is also a clock requirement, “said Kundan Shahi, founder and CEO, legalpay.
Another obstacle for the bow in resolution is a 1% tax reduction in the source (TDS) that the property sold did not move under Section 194 – he.
“ARC trains its rights under Sarafesi acting as a guaranteed lender and only declares the results as far as its contributions.
Every excess amount is realized above and above the contribution is returned to the borrower.
Therefore, TDS that is sold by properties under sarfaesi can be kept away.
from PurView part 194 – he, “Bansal said.