FINOMENAL 2016: Day 1: “Asset Reconstruction Companies”-Mr. Sandeep Hasurkar, Vice President at IL&FS Renewable Energy Limited

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Mr. Sandeep Hasurkar conducted an interactive session on the topic of ‘Asset Reconstruction’Companies.

To begin the discussion, Mr. Hasurkar told that there is a huge scope for the asset reconstruction companies in the coming years as Indian bond market has not progressed much in the past years and this provides an untapped market.

Taking the discussion forward, Mr. Hasurkar said that Indian banking system provides money in two forms- working capital and term capital.

The three strands in banking in India are- the Commercialized bank, the Nationalized bank and the debt market. He also mentioned that around 1990, it was found that the model for term lending was facing some problem. It was then the DFI found that their development was under threat and hence, the commercialized banks were formed.

Talking about the national banks, he said that from 2001 till date nationalized banks have been lending money in project finance and there can be expected some changes in the years to follow.

Giving a brief overview of asset reconstruction, Mr. Hasurkar said that, “If I am lending money, assets have to be mortgaged. And when an asset goes bad the first thing that disappears from the market is the working capital.”

While discussing the difference in the mindset of commercialized and nationalized banks, Mr. Hasurkar said that recovery of an asset is the main area of concern for commercialized bank whereas, it is not considered in the case of nationalized banks. He said that the biggest strength of commercialized banks is that they are the generator of an asset. “Once I have negotiated a deal I will hold it until I find another buyer.” Commercialized banks have a dynamic model.  The assets not making profits are sold out. On the other national bank hold asset until maturity.

To conclude, Mr. Hasurkar told that a number of assets and their value are humongous. Currently, banks do not have many specialists for resolution. The process of resolution has to be very creative. Hence asset reconstruction companies will have a bright future in the coming years.

 

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