Uday Kotak bats for revamp in financial sector resolution policy amid RCap crisis
1 min read 27 Mar 2023, 02:09 PM ISTVeteran banker Uday Kotak's tweet was in response to the Reliance Capital resolution plan hitting a roadblock
PremiumKotak Mahindra Bank CEO and managing director Uday Kotak said it's time for a relook at India's financial sector resolution process. The veteran banker's tweet was in response to the Reliance Capital resolution plan hitting a roadblock.
“NBFC resolution. RCap, Srei experience signal poor recovery below liquidation value for creditors. NCLT process is also tardy whether IBC or otherwise. In IL&FS too while recovery ratio is better, legal process takes long. Time for policy relook at financial sector resolution," Kotak wrote in Twitter.
The plan of debt-ridden Reliance Capital's lenders to conduct a second round of auction has hit a roadblock, as bidders are apparently not inclined to another round under the insolvency resolution process, according to a PTI report.
Meanwhile, the Supreme Court (SC) has listed the matter regarding the second auction for hearing in August.
The apex court on March 20, 2023, admitted Torrent Investments' -- the highest bidder with ₹8,640 crore resolution plan -- appeal against the lenders' decision to hold another round of auction.
However, the court refused to stay the second round of the auction.
The insolvency process of Reliance Capital (RCAP) has been going on for more than 450 days, which is much longer than the statutory time limit of 330 days.
According to the sources, Torrent has recently conveyed to the lenders that it is not willing to participate in the second round of auction.
The other bidder -- IndusInd International Holdings Ltd (IIHL) of Hinduja Group -- has also told the lenders that it wants to withdraw its revised bid of ₹9,000 crore, which it had made after the auction process, and retain the old offer of ₹8,110 crore in the first round of auction, they added.
This has upset the Committee of Creditors (CoC) plan to conduct a second round of auction with a base price of ₹9,500 crore to maximise the recovery from the RCAP resolution process.
With agency inputs
