IBC Ordinance Will Deter Future Defaulters, Says ICICI Bank’s Chanda Kochhar
Chanda Kochhar said the resolution and recovery process of the NPAs are moving on the right direction.
The amendments to the insolvency code will act as a big deterrent for companies which are likely to turn into non-performing assets, ICICI Bank Ltd.’s Managing Director and Chief Executive Officer Chanda Kochhar told BloombergQuint on the sidelines of the Global Entrepreneurship Summit 2017 at Hyderabad.
Indian lenders have made significant progress on recognition of bad loans and the Reserve Bank of India has put in place many enablers for resolution, she said. Things are moving in the right direction, she added, while pointing out that a lot more needs to be done to ensure that “resolutions happen on time and banks take decisions on time”.
Watch the full interview here.
Here are edited excerpts from the conversation.
What, in your mind, is the solution available for funding women entrepreneurs?
As far as entrepreneurship in India is concerned, a lot is changing. India is no longer just a manufacturing or services economy. As the value chains gets created across fintech, e-commerce and various other fields, that is giving opportunity for more people to start their own ventures and this is where the women find niches and become entrepreneurs.
For an enabling environment, access to credit is very important. Government has started a lot of schemes like Standup India and Mudra, where there is special focus on lending to women in micro form which is picking up and banks are also participating in it in big way.
The entire self-help group movement is the biggest movement in world and in India, where we too, as a bank, lend to self-help groups and also give them skill training, credit linkage and market linkage through which many are becoming entrepreneurs.
If you look at private equity players participating in India, in last three years, the number of private equity players have increased more than 40 percent and most of them did not even exist earlier in India. These new players are funding new startups. So, a lot has been happening around the ecosystem.
Also Read: GES 2017: Ivanka Trump Says Women Entrepreneurs to Usher in New Prosperity
Do we need separate funds focusing on women entrepreneurs?
There are funds who focus just on women entrepreneurs. But it is important to grow the entire entrepreneur ecosystem to grow and develop. Even the ease of doing business is making life easier for entrepreneurs.
Is the worst over now in terms of asset quality?
In non-performing and stressed assets, we must remember that there are three parts to it. One is the recognition of NPA, the other is resolution and the third is recovery. As far recognition is concerned, the country has come a long way. A lot of the stressed assets are already being recognised as NPAs. I am not saying that there won’t be new NPAs. But the rate of additions to NPA has been coming down in the last few quarters.
It is more important to focus on resolution, so that we can recover these assets in a productive manner. A lot of enablers have been put it in place, such as the various RBI schemes enabling change in management, doing deep restructuring and so on. The latest is the bankruptcy code, in which the NCLT will enable that decisions are taken on time. The decisions should have a judicial cover, so the banks are also enabled in their mindset to take decisions.
So things are moving in the right direction. We do have a lot of work to do in ensuring that the resolutions happen on time and banks take decisions on time and that will resolve assets while they are working on productive assets and not lose value.
Do you think it is a good idea to keep promoters out?
It is a big deterrent for future companies from becoming NPAs.
Will you think that we will see uptick in GDP?
A lot of high frequency indicators are showing an uptick. In the last two months, exports saw a big improvement. Commercial vehicles, which where in negative territory in beginning of the year is in positive territory now. Vehicle sales continue to do okay. IIP is also showing improvement compared to the past. There are a lot of those positive impacts.
The government’s expenditure on roads and railways is creating a multiplier impact. Affordable housing projects are picking up and these projects also provide a multiplier impact. Without going into numbers, I would say that a lot of things are going in the positive direction.