• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Dinesh Narayanan

"I have vast experience dealing with the public... people. In my long career as a police officer, I have built contacts and relationships that would help the venture."

Mumbai , Aug. 28

AS the Commissioner of Police of Mumbai City, Mr M.N. Singh, was chasing some of the toughest criminals in the country. As a retired cop, he is preparing to hunt loan defaulters and help financiers restructure non-performing assets (NPAs).

Mr Singh has taken over as the Chairman of a newly formed outfit, Invent Assets Securitisation and Reconstruction Pvt Ltd. The Chief Executive Officer of the company is the former CEO of Zee Television, Mr R.K. Singh.

The company, floated in March this year, states its main object of incorporation as, "act as agent or consultant for asset reconstruction and securitisation for banks, financial institutions, etc."

Confirming that he has taken over as the Chairman of the concern, Mr M.N. Singh told Business Line, "It is an altogether new line of business. Banks and financial institutions have no machinery to tackle the problem of NPAs. We would help them do it."

He said that the company is also exploring a foreign tie-up. "Yes, we are looking for a partner. It could be a private fund," he said. He added that the company had already sent out exploratory letters to banks and financial institutions for asset securitisation and reconstruction.

Asked how his association would benefit the company, Mr M.N. Singh said, "I have vast experience dealing with the public... people. In my long career as a police officer, I have built contacts and relationships that would help the venture."

Interestingly, the company changed its name in May by adding the word `reconstruction'. It has been registered as a private limited company with a share capital of Rs 20 lakh. (The Reserve Bank of India's draft guidelines suggest net owned funds of Rs 2 crore for an ARC.) The main promoters of the company are a chartered accountant firm, Ramesh Vora and Associates, a lawyer, Mr Nishit Dhruve, and a realtor, Mr Anand Sanghavi.

Asset securitisation and reconstruction is an emerging business in the country and has been given a big boost by the Securitisation of Assets and Reconstruction of Financial Assets and Enforcement of Security Interest Act enacted by the Government recently.

International rating agency Standard and Poor's estimates the NPAs in the Indian financial system at about 25 per cent of total assets and the recovery rate at near 30 per cent. Currently, there are only two ARCs in the country, Asset Reconstruction Company of India Ltd promoted by four banks led by ICICI Bank and HDFC Bank. The other one is promoted by IFCI Ltd. An ARC can benefit from the Act only by registering with the RBI. "Otherwise it would remain an asset recovery and repossession company," said Mr D. Thyagarajan, Director, Structured Finance Ratings, Crisil.

Crisil expects the growth in the securitisation market to intensify disintermediation of financial services in India. Companies that possess strong origination and collection skills can now access cheaper financing from the capital markets through securitisation.

Moreover, lenders are expected to pass on the benefits of cost-effective funding to the underlying borrowers, thereby, improving the entire financial system's efficiency.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Pension scheme launch date not finalised

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line