With a defaulter as chief, Ficci against NPA Act

FICCI on Tuesday opposed the NPA Securitisation Act stating that it was biased against even those borrowers who were doing serious business. But with a defaulter at the helm, considering A. C. Muthiah is the Ficci president, the chamber probably had little choice but to condemn the Act. Muthiah’s industrial empire SPIC is among the list of defaulters who have been served notices by FIs.

Full marks to Vajpayee for reforms and governance

New Delhi: Lauding NDA government’s performance, especially in economic reforms despite limitations of coalition politics, Ficci on Tuesday gave full marks to Prime Minister Vajpayee, saying either he or someone like him should head the government after the next general elections. “Although P.V. Narasimha Rao kicked off liberalisation, I will give full marks to Vajpayee,” new president of Ficci A.C. Muthiah told PTI on the performance of successive PMs in pursuit of reforms and taking difficult economic decisions. “Intentions of the present government are very clear…It is very receptive to the industry, he said while appreciating government’s initiatives in policy implementation. Story continues below this ad “They (government) mean business… And they have conviction..They have done a good job,” he said. PTI

The apex chamber not only defended the case of majority of the defaulters by stating that 90 per cent of the defaulters have defaulted on their payments due to ‘adverse market conditions’.

In a statement, Ficci chief demanded spelling out of lenders’ liability and stated that the Act should be reviewed for safeguarding interest of both borrowers and lenders.

When contacted by The Indian Express, Ficci Secretary General Amit Mitra chose to defend the chamber’s view point in the light of statements made by Muthiah. Mitra said ‘‘our general perspective is that 90 per cent borrowers who have not paid back are facing adverse market forces including crash of prizes, lack of demand, economic recession, weak currency and other structural changes’’.

To reduce the NPAs, Ficci has suggested that ‘this should be mitigated in a mutually acceptable manner through various modes including special purpose vehicles’.

However, Mitra was quick to add that ‘‘the rest 10 per cent who did not pay back purposely or channelled the money somewhere else, by all means can be chased by lenders having all terms and conditions in place’’. He said that ‘‘lenders always go for scrutiny of the proposed project and make a detailed evaluation hence the onus for the NPA should be borne by both the parties in a balanced way’’.

Suggesting a review of the new Securitisation Act for tackling NPAs of banks and FIs, Ficci president said it was tilted in favour of lenders and was against borrowers who were already reeling under pressure of high interests amidst threat of cheaper imports.