Speaking for the first time after being appointed the head of Restructuring Committee by the RBI, KV Kamath says that this new normal requires an overhaul of the kind of restructuring done in the past and his committee is in the process of laying down the criteria for the companies for this process.
In an exclusive interview, the veteran banker told CNBC-TV18, “This time what the Reserve Bank has done is distinctly different from the past.”
When asked if this time the process will be different from ‘extend and pretend?’ KV Kamath said, “RBI’s guidelines on restructuring shows it’s done with an intent to help the industry.
RBI’s guidelines are aimed at companies impacted by COVID 19. Of course, there will be a section of companies and banks who will want it for all but that’s not the case, if it were, what you said would have been true.”
The Restructuring Committee under KV Kamath is in the process of laying down the criteria for restructuring as per the guidelines given by the Central Bank. When asked on the tenets of the rules, he said that he doesn’t want to pre-empt the decisions of the committee which is working in the ambit of what the RBI has stated.
“The entire industry is waiting for the Committee’s recommendations on the restructuring process,” said corporate lawyer Haigreve Khaitan of Khaitan & Co.
There is also a lot of guesswork on re-starting the Insolvency & Bankruptcy (IBC) process as the restructuring is squarely on COVID 19 impacted companies, so what about the other ailing companies? KV Kamath said, “IBC and restructuring are two separate processes altogether. IBC was an earlier process and that would have run its course.”
On the economic front, KV Kamath is of the view that the macro indicators have thrown up a positive surprise and show signs of recovery. He said, “In reality, it’s a much softer landing than what was expected earlier.”
He told CNBC-TV18, fiscal deficit looking better than expected, electricity off-take, logistics, manufacturing, corporate earnings are all recovering fast. Kamath added, few sectors are critical, need help from banking system and policy measures, a large part of pain is getting alleviated due to government measures.