INSUBCONTINENT EXCLUSIVE:
Everyone is scared of someone
Bankers are reluctant to lend
The regulator is unwilling to relax the rules
The minister is hesitant to tell the regulator to change the rules
And babus, who advise the ministers, find it too hot to handle
All are praying for the court to kick the can so that they are not roasted and ridiculed by the Opposition before 2019, or years later
pulled out of retirement and put through a Spanish Inquisition by another government.
The protagonists, opponents, and the actors with bit
fortnight may be too short a time for doing the arithmetic and convincing stakeholders
RBI officials will not tweak the rules that are now engraved in the February 12th directive (which requires banks to begin the bankruptcy
process if they fail to resolve NPAs by August 27)
modifying a circular seven years ago that gave a second chance to a troubled airline called Kingfisher
(What RBI merely did then was to extend the easier loan restructuring framework that was till then applicable for NPAs of manufacturing
of the February circular will be slacked only if the government (the owner) directs it
are announced and matters boil over to the court
former to direct the banking regulator, is academic
Has it ever been usedRupee Perhaps, the section had a significance before 1949 when RBI was a company with private shareholders who could go
captured the imagination of the liberal world
Neither can the government afford such an undisguised step to force RBI nor can it furtively attempt to influence Mint Street in reviewing a
directive that would give defaulting businesses houses a lifeline
plausible that men deputed by the ministry to discuss the subject had failed to grasp its wide ramifications
When they finally did, the bullet had left the gun barrel, and there was no going back for RBI.
A government that pursues reforms on
war-footing, and actually believes that the style of functioning that prevailed for the past 60 years can only be changed through shock
therapies, must be ready to bear the cost of harsh reforms
not lose their jobs but it could mean annoying litigations and distress sale of assets as well as huge haircuts, losses, and erosion of
And when that happens, the finance minister of the day, should be ready with the cheque book to bring weary lenders back on their feet.
If
the apex court upholds the RBI directive, the financial consequences that comes with a bad handling of a difficult problem will have to be
Someone may have to pay the price
The coming months could unravel whether the power NPA mess would claim a scapegoat and who that would be!
