‘IBC: Good reform, but hits entrepreneurship’
While lauding the insolvency and bankruptcy code (IBC), corporates feel it could be curtailing entrepreneurship. They also believe there’s a need for the Reserve Bank of India to allow Indian banks to lend against shares.
JSW Group chairman Sajjan Jindal said, “I’m one of the strong proponents of IBC. It’s a good reform but the challenge is that it has killed a lot of entrepreneurs in India.” Reacting to Jindal’s comment, SBI chairman Dinesh Khara said, “There should be some discipline in the system.”
Piramal Group chairman Ajay Piramal added that IBC proceedings need to move faster as they get stuck in litigations. On how raising money for leveraged buyouts is difficult, Jindal said that was a handicap for corporates because while foreign banks have the flexibility to lend, Indian banks are not permitted to lend against shares.
Jindal said the central bank needs to change that perspective. Jindal is in the midst of finalising financing for its $10-billion acquisition of Holcim’s India assets, ACC and Ambuja Cement, for which the Adani Group too has shown interest. Piramal added that promoters in India are depending on foreign funds which makes them uncompetitive in the global environment.
Because of this, Jindal said, “What’s sad is that we are letting go of our marquee assets in India to foreigners.” Standard Chartered Bank India CEO Zarin Daruwala said IBC has shifted the balance of power to banks from borrowers and brought in a better credit discipline. Piramal said the country needs to have more banking licences.