PTI
Mumbai
Even as bad assets mount, banker Uday Kotak has said legal tangles and sluggish economic growth are making asset quality resolution a tough job for lenders, and termed the RBI's asset quality review as a “small subset” of the stress that exists in the system.
“The problem is once a loan gets into problems, the recovery process is much longer than earlier. It is not happening as fast as one would like it to. If one goes into the ditch, getting out of that ditch is much tougher than before,” Kotak, vice-chairman and managing director of Kotak Mahindra Bank, told reporters Wednesday.
Kotak said both Debt Recovery Tribunals and Debt Recovery Appellate Tribunals are “bottlenecks” that take time.
Elaborating on the reasons as to why it is taking it longer for recovery, bank's joint managing director Dipak Gupta said the legal process, along with the slowdown in growth and the global demand weakness is the root cause.
When asked about the asset quality review, Kotak was not so sanguine about its benefit, saying the outcome of the one-time exercise is only a subset of the stress.
“The AQR is a small subset for a much larger stress in the system. The actual pain depends on each bank, but AQR is not the end of it,” he said.
Kotak welcomed the Bankruptcy Code which was passed by Parliament Wednesday as a step in the right direction, saying it is important to let companies die if they are facing difficult problems.
If the code facilitates death of such companies, “it declogs a number of zombie companies. You cannot have zombie companies”, he said.
When asked to comment on the two years of the Narendra Modi government, Kotak expressed hope that the “acche din” promised by the Prime Minister in his campaign are on the way.
“Lot of good things (have happened), and hopefully acchhe din are on the way,” he said.
