INDIAN BANKS' ASSOCIATION

Background
During the last 15-18 months, Corporate Debt Restructuring (CDR) has evolved as a voluntary and non-statutory arrangement between lenders and borrowers for timely and orderly restructuring of debts of corporate entities affected by certain internal and external factors. The RBI guidelines on CDR framework were recently revised to enlarge scope and coverage under the scheme. Experience gained by the CDR Body during the last 18 months is worth analyzing to evolve strategies for larger participation of credit institutions in debt restructuring. While CDR cell has restructured over 70 accounts with loans outstanding over Rs 45,000 crores since inception, the number of cases referred by commercial banks has not been many. It is expected that greater awareness on the working of CDR mechanism among senior operating executives in banks would help in initiation of timely corrective actions on accounts facing difficulties. A stitch in time saves nine. Awareness also needs to be created among borrowers on the benefits of the scheme so that they readily come forward to present their problems and seek help before their accounts turn into NPAs. Enactment of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SRFAESI Act) has been a major step towards improving the climate for recovery of bank dues. Besides giving powers to secured lenders to realize dues through enforcement of security interests without intervention of courts, the Act paved way for setting up of Asset Reconstruction Companies in the country. RBI has since come out with the regulatory framework for establishment of ARCs. By taking over bad loans in the books of banks and financial institutions at a mutually agreed consideration, ARCs help banks to clean up their balance sheets. ICICI Bank, IDBI, SBI and a few other institutions/ banks have jointly set-up Asset Reconstruction Company (India) Limited the first ARC to be registered with RBI. Valuation of assets and structuring of the sale of assets are complex transactions needing expert handling. ARCIL will give a first hand presentation on the working of ARC and the teething problems they faced.
Objective :
Timely corrective actions when the assumptions made at the time the project was conceived and executed do not materialize, will go a long way in preserving the economic value of the project. To the bankers this is a crucial element in credit management. Even for an impaired loan, restoring the health through a structured restructuring exercise is the first step in NPA Management. If this fails, one needs to look for a quick exit option. Legal steps for recovery of dues take time and in the process, the value of assets goes down. For a banker time value of money is critical. Sale of the assets at the best possible price is the ideal way to recycle the funds blocked in NPAs and also clean up the Balance Sheet. The seminar aimed at providing a first hand exposure to the senior bank executives to the working of the institutional arrangements for debt restructuring and Asset reconstruction.
Schedule:
Shri Ashish Saha, Director, NIBM welcomed the participants.
Shri J N Godbole, Executive Director, IDBI made an introduction to Corporate Debt Management covering the areas of NPA Management by Banks & Financial Institutions, NPA Resolution Tools and Evolution of CDR Mechanism
Shri Sibi Antony, CGM, IDBI addressed the session on CDR Mechanism in India. He elaborated on CDR Structure, Restructuring Process and Monitoring Mechanism
Shri S Khasnobis, President and COO, ARCIL and Shri Sudhir Jha, Legal Head, ARCIL addressed the participants on Asset Securitisation and Re-construction covering International Experience, Indian context and Legal framework in regard to asset reconstruction companies
Shri R.Kakker, MD and CEO, ARCIL and Shri S Khasnobis informed the participants about Business policies and Strategy of ARCIL and highlighted on the areas of Valuation of Assets, Transaction Structure and Investor Participation.
Towards the end, all speakers formed a panel and had indepth discussion on the issues along with a question-answer session
Dr V S Kaveri, Professor, NIBM summed-up the day's proceedings.
The seminar was attended by Senior Executives in banks, financial institutions and trade bodies associated with the working of the institutional arrangements for debt restructuring and Asset reconstruction.


Shri K. Unnikrishnan, Sr. V.P (Policy), IBA compering the proceedings. On the Podium are (left to right) Shri J N Godbole, ED, IDBI, Shri Ashish Saha, Director, NIBM and Shri Sibi Antony, CGM, IDBI	Panel in action : Shri S Khasnobis, President and COO, ARCIL, Shri Ashish Saha, Director, NIBM, Shri R.Kakker, MD and CEO, ARCIL and Shri Sibi Antony, CGM, IDBI, during the interactive session.