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Assocham has called upon the Government and Reserve Bank of India to take a pragmatic approach while resolving the complex issue of non-performing assets of banks.
Reviewing the state of the economy here today, the Chamber Executive said a flexible approach would help recover debt while also ensuring turnaround of companies saddled with debt.
Sandeep Jajodia, Assocham President, expressed concern that the RBI, in its credit policy review yesterday, had missed yet another opportunity to lower the policy interest rates and help revive industrial and overall economic growth.
Calling for a pragmatic assessment of NPAs and then seeking to address the issue would be better than merely declaring them NPAs and going all out against the defaulter who defaulted due to factors beyond his control.
Jajodia said, “The terms of different schemes for resolution of NPAs should be flexible and liberal enough to be accommodative, rather than being rigid.”
“Once an account turns into an NPA, the avenues for working capital are choked, which hastens the curtains on the enterprise. Thus, whatever chances are there for survival and revival of a stressed enterprise or a project, are gone once the working capital requirements are not met,” he said.
Referring to infrastructure and real estate projects, which are close to completion but are unable to do so as they have run out of working capital, he felt such projects need to get priority.
“For converting a standard account into an NPA, the 90-day limit for non-payment of interest or principal should not be treated sacrosanct because the moment an account becomes an NPA, all finance channels are choked,” he said.
The Assocham Managing Committee, which met here today, felt the latest GDP data for the fourth quarter of the previous fiscal shows that NPAs and the lack of private sector investment are the biggest road blocks for economic growth.
The Chamber wanted the Government to be considerate towards businesses as the GST regime is implemented, addressing issues of roll-out and the teething troubles.
EASE OF DOING BUSINESS
Referring to recent rankings where Telangana and Andhra Pradesh have been jointly ranked No.1, the Assocham called upon states to emulate the best practices adopted by these two states.
Calling upon the Centre and states to consider online clearances for various projects, the Assocham executives said both these states have been forerunners in terms of promoting ease of doing business, which is reflecting on the ground with fresh investments.
The Assocham mentioned how the Centre has initiated several deregulation measures for ease of doing business, which has boosted foreign investment.
Assocham Secretary-General DS Rawat expressed the need for India to improve its global ranking to attract investments while seeking to cut down transaction costs.
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