Tuesday, October 4, 2022

Right time for investing in stressed Indian assets: IBBI Chairperson

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Singapore: Dr MS Sahoo, Chairperson, Insolvency and Bankruptcy Board of India (IBBI) said on Thursday that the market for distressed assets in India is vast and will increase in days to come and there cannot be a better time than the present one for making investments in these.

Speaking at the FICCI-IBBI-HCI Singapore Conference on IBC (Insolvency and Bankruptcy Code), Dr Sahoo said, “The stressed assets market will increase as the Indian economy, which is huge, is likely to grow more than 7 percent over the next two decades, with simultaneous increase in innovation, competition, credit market and credit growth.”

‘There cannot be a better time than the present one’

He further added, “Given the future potential of the Indian economy, it is a great opportunity as far as investors are concerned and, therefore, those seriously thinking about investment in India, there cannot be a better time than the present one when distressed assets are available through the Code (IBC).”

‘Criticism about haircut is unfounded’

On the issue of haircut, Dr Sahoo said that the criticism about haircut is unfounded as it still provides a bonus when compared to the liquidation value of the firm and that it has been seen to decline over time in every other jurisdiction.

Dr Sahoo highlighted that there has been a significant improvement in the credit behaviour of the corporates as repayment of debt is no longer an option but an obligation. The fear of CIRP (insolvency resolution) permanently taking away the control and management of the firm from existing promoters deters them from committing a default.
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