Commercial banks received a suggestion from Financial Services Secretary Rajiv Takru to have an independent oversight mechanism for considering cases under the corporate debt restructuring (CDR) cell.
Takru suggested that the independent mechanism must not have any government representative or any serving banker, but some experts who can scrutinise from the correctness point of view whether the case referred is genuine.
He said this to reporters on the sidelines of the Skoch summit in Mumbai. The committee consisting of an expert from the legal field, investigative agencies and a finance professional, to make sure that there will not be any scope for allegations.
As on March 31, 2013, loans worth Rs 229,013 crore, or 401 companies’ loans, were restructured, which is more than double the amount from 2011-12. Takru suggested an independent mechanism in order to prevent allegations of banks using CDR mechanism.
Under CDR mechanism, the repayment tenor of a loan is delayed to take care of a borrower’s temporary needs in times of stress.
Takru cited a recent case of a corporate conniving with lenders to get its loans restructured and immediately approaching the Board for Industrial and Financial Reconstruction in two months which froze the repayment, so the promoter got away scot-free with the money.
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