RBI suggests online trading platform for distressed assets

Setting up an online trading platform will help India achieve a thriving market for sale of NPAs (non-performing assets), Reserve Bank of India (RBI) deputy governor, Dr Viral Acharya said at an ASSOCHAM event held in Mumbai.

“IBA (Indian Banks’ Association), ARCON (Association of Asset Reconstruction Companies) and CRAs (credit rating agencies) can come together to set up the equivalent of Loan Syndication and Trading Association (LSTA) in the United States,” said Dr Acharya while inaugurating an 'ASSOCHAM Arcon 2018 - ARCs: Emerging avatar in new distressed landscape.’ He added that it provides fundamentally three things—disclosure on credit events, digitisation of loans and legal documents and standardisation along the way. Besides, it also provides online bidding platforms for the sales to take place.

“My recommendation or at least I would encourage various players to discuss whether there is value to building something like this as the United States has built it over the period of time and South Korea has built it during the crisis and then it became an industry standard for doing loan sales thereafter,” said Acharya.

Acharya also released the summit backgrounder at the conference. Other present on the conference was ASSOCHAM secretary general, D S Rawat; Gurpreet Chhatwal, president, CRISIL Ratings; Birendra Kumar, chairman, ASSOCHAM National Council on Asset Reconstruction; Pallav Mahapatra, deputy managing director (Stressed Assets Resolution Group), SBI; Abizer Diwanji, partner and national leader-Financial Services, Ernst & Young LLP and M Narendra, senior advisor, ASSOCHAM.