While India's financial stability was on a defined trajectory, COVID-19 disrupted everything and exacerbated the trouble with stressed assets. Experts have opined that the second wave of COVID-19 would probably worsen stressed assets in the banking system. This has been seen as a case of one step forward, two steps back.
Since 2015, the Indian banking system has been acquiescing crack after crack under the burden of NPAs (non-performing assets). To combat this, mechanisms like the Insolvency and Bankruptcy Code was implemented to deal with the blowback ending up with the pandemic causing the situation to go back to square one. The RBI alleges that NPAs could go up to 13.5% by the end of this year and with an unsupportive macroeconomic framework, may end up going to 14.8% as well. This is going to continue to weaken India's financial stability with low credit growth and can see it happening.
Furthermore, India has a history of bad debt and a pattern of not being able to size up the issues at hand. One solution is to launch a bad bank with the goal of housing bad loans, but experts believe it would be a long time before it starts to be effective and this can only truly facilitate change if the assets get resolved and aren't just kept stagnant like in a storage facility. How do we better resolutions and accelerate digital infrastructure to combat this? Is it feasible? Will the cracks deepen? The gravity of the situation at hand and the rise in bad banks has reoriented the discourse surrounding stressed assets.
We need to ascertain the strategies and what structures one can employ as buyers, as well as assess the complexities and arising opportunities there would be in the stressed asset space. All of this and much more from bankers, policymakers, investors and other key stakeholders at India’s most compelling thought leadership forum at the VCCircle Stressed Assets Investment Summit 2021 on August 13, 2021 on a virtual platform.
By Jaideep Mehta, CEO, Mosaic Digital & Head, Mint
Pandemic has pushed many companies specially MSMEs to go for insolvency due to disturbances in macroeconomic factors. In most of the cases, it isn’t attributed to company’s internal factors. To help such MSMEs, the government has announced pre-packed insolvency resolution. Is it going to help MSMEs? The session would focus on how the creditors are protected and how is it better than CIRP?
Speakers:
Eshwar Karra, CEO-Kotak Special Situations Fund, Kotak Investment Advisors Limited
Amit Kansal, Chief Investment Officer, Aditya Birla Stressed Asset AMC Pvt. Ltd.
Dr. Fareed Ahmed, Former Executive Director, Punjab & Sind Bank
Moderator:
Shrija Agrawal, Executive Editor, Hindustan Times Digital
Soon, we may have a bad bank. The Indian Banks’ Association (IBA) has a plan to establish a 6000 crore rupees NARCL (The National Asset Reconstruction Company Limited). The goal to clean up the bank books has also been prominently voiced. The idea is to manage the bad debt of public sector banks and other financial institutions. But how is it different from other ARCs (asset reconstruction companies)? Would there be additional tools of resolution? What are feasible roads for this?
Speakers:
Nitin Jain, Senior Partner, AAA Insolvency Professionals LLP
Pradeep Goel, CMD, Prudent ARC Limited; Chairman, ASSOCHAM National Council for ARCs & Vice -Chairman, ARC Association
Girish Sharan Sinha, MD & CEO, ASREC (India) Ltd.
Moderator:
Nilesh Kumar Gupta, Partner, McKinsey & Company
By Neeraj Seth, Managing Director, Head of Asian Credit, BLACKROCK
The RBI’s Financial Stability Report disclosed that GNPAs of financial institutions (NBFCs) increased to 6.3% as of March 2020 from 5.3% as of March 2019. The asset quality of NBFCs is expected to deteriorate further due to disruption of business operations caused by the pandemic. Many NBFCs are filling for insolvency due to the stressed assets and liquidity crunch. One such recent example is of DHFL. There are many opportunities which lies in the sector. How can these opportunities be leveraged? Would finding a new investor/owner for stressed NBFCs solve the problem?
Speakers:
Raman Aggarwal, Director, Finance Industry Development Council
Shreeram Sethuraman, MD & Head - Financial Institutions Coverage, BNP Paribas India
Ashwyn Misra, Partner, Trilegal
Moderator
Dinesh Arora, Partner & Leader - Deals, PwC India
In December 2020, global financial services firm, Macquarie Securities has predicted gross NPAs in the retail portfolio to double to 4%, mentioning that market shouldn’t be concerned over retail defaults. However, with the second wave of Covid, unsecured personal loans, credit card outstanding, business banking and MSMEs became new pockets for NPAs. It involves loans worth INR 28-30 lakh crore accounting for 30% of the total bank loan book.
In 2020-21, the banks' maximum slippages have been coming from retail portfolio. Now, private banks have a higher share price of unsecured retail whereas PSBs have more stressed MSMEs in their portfolios. How should bank deal with this situation? How to resolve retail NPAs problem and what is the way forward?
Speakers:
Manish Nihalani, Chief Operating Officer, Alchemist Asset Reconstruction Company Ltd.
Ramakant Rai, Partner, Trilegal
Anuj Kumar, MD & CEO, Pepper India Advisors Pvt Ltd.
Anshuman Panwar, Co-Founder, Creditas Solutions
Moderator:
Rajiv Chandak, Partner-Restructuring, Deloitte India
Neeraj Seth, Managing Director, is the Head of Asian Credit and has been in his current role since 2009. He is the portfolio manager for the Asian Tiger Bond Fund and Asia Pacific private credit fund. He leads the strategy for Asian Fundamental Credit and is responsible for providing oversight of the investment process, performance, and the team's infrastructure as well as determining the strategic direction and growth initiatives of the platform. He has been responsible for building the Asian fundamental credit business since 2009.
Prior to joining BlackRock in 2009, Mr. Seth was a Senior Vice President focusing on the Asia Pacific market for R3 Capital Partners. He previously held a similar role with the Global Principal Strategies team at Lehman Brothers. Previously, he was an Associate Partner with McKinsey & Company where he was in the leadership group for the Technology & Telecom practice in Southeast Asia.
Mr. Seth earned a BE degree in mechanical engineering from Delhi University and an MBA degree in finance from the Indiana University of Kelley School of Business.
Mr. Amit Kansal is the Chief Investment Officer of Aditya Birla Stressed Asset AMC Pvt Ltd which runs a Category II AIF focusing on special situations and distress opportunities. At Aditya Birla, he has been involved in some of the most marquee transactions including the largest OTS of its kind for a 1350 MW Thermal Power plant. With a total experience of more than 18 years, he has now been with the Aditya Birla Group for more than a decade and spearheaded the group’s entry into this business.
Prior to this role, he as one of the founding members of team, led the Project & Structured Finance vertical for North & East for Aditya Birla Finance and set up an immensely successful franchise in that business. His role spanned project linked lending, structured debt and corporate finance solutions to large and mid-market corporate houses. He has covered infrastructure, core, hospitality and real estate sectors extensively apart from manufacturing and select sunrise sectors. Previously, he has worked at Srei Infrastructure, ICICI Bank and Ernst & Young.
He is a commerce graduate from Shri Ram College of Commerce and a Rank Holder Chartered Account.
Eshwar joined the Kotak Mahindra Group in 2000 and brings with him over two decades of financial services experience. He is part of the core leadership team at Kotak Investment Advisors Ltd.
Eshwar is the CEO of the Kotak Special Situations Fund where he oversees investments across all special situations, distressed and credit opportunities. The fund strategy is to invest in opportunities across all asset classes and participate in the Insolvency and Bankruptcy Code (IBC) initiated resolutions.
Prior to Kotak Special Situations Fund, Eshwar was the CEO of Phoenix Asset Reconstruction Company (a Kotak sponsored ARC) which had an AUM of US$1 billion. During his 5 year tenure at Phoenix, he made investments across all major sectors and successfully resolved investments.
Eshwar was the founding member of the distressed assets business at Kotak and has helped the group in successfully investing over INR 2,500 crores (US$417 million) of its proprietary capital in distressed assets. He has built time tested expertise in identifying distressed opportunities, structuring and executing complex financial transactions as well as securing profitable exits.
Prior to Kotak, Eshwar has worked at Ceat Financial Services (RPG Group) and Sundaram Finance Ltd.
Eshwar holds a Bachelor's degree in Commerce from the University of Pune and is a Management graduate from the Institute of Management Development and Research, Pune.
Raman Aggarwal is the Director of Finance Industry Development Council (FIDC) – A Representative body of Assets and Loan Financing Non-Banking Finance Companies. He is currently Consultant to The World Bank, Consultant to Nomura Research Institute Consulting & Solutions India P Ltd., Area Head – NBFCs at Council for International Economic Understanding (CIEU) and Advisor, Shriram Transport Finance Ltd., which is one of the leading NBFCs. He is also an Independent Director on the board of Pasialo Digital Ltd., which is a leading NBFC in North India engaged in financing MSMEs on a digital platform. He has more than 29 years of working experience in the NBFC sector.
He has been actively representing the NBFC sector, being a member of Advisory Groups to Ministry of Finance & RBI, Core Group setup by Ministry of Corporate Affairs, and Special Task Force at FICCI.. He was the signatory to the Engagement Letters signed by World Bank Group with FIDC. He is the Chairman, Working Group on NBFCs at Centre for Economic Policy Research (CEPR).
He was awarded the “Best NBFC Exemplary Leader” Award at the ET NOW BFSI Awards and “100 Top Most Influential BFSI Leaders” award at the World BFSI Congress in 2018 & 2019. He has addressed major events and seminars, like Global Convention on Corporate Governance and Sustainability at London, IFC’s Financial Infrastructure Workshop for Da Afghanistan Bank, EuroFinance India, The Economic Times Summit on Financial Inclusion, National Summit on NBFCs and World Auto Congress organized by ASSOCHAM. He has been an invitee to the Pre-budget discussion of the Finance Minister with representatives from banking and financial institutions. He is a Guest Faculty at Institute of Chartered Accountants, India (ICAI), International Management Institute (IMI), New Delhi and Indian Institute of Management (IIM) Tiruchirappalli.
Raman is Masters in Urban Planning from School of Planning &Architecture, New Delhi and Bachelor of Civil Engineering from Thapar Institute of Engineering and Technology, Patiala. He has also undertaken a Special Training Programme for the Personnel of Non-Banking Finance Companies at RBI College of Agricultural Banking, Pune.
Manish Nihalani is the Chief Operating Officer of Alchemist Asset Reconstruction Company Limited and has been associated with the Company since 2016.
He leads strategy for acquisitions and resolution and provides strategic direction and guidance for the entire ARC operation. He has been responsible for distressed portfolio management from acquisition to the resolution. He has been instrumental in business development including asset evaluation and Institutional / banking relationship for the Company. He has driven the growth trajectory of Asset Under Management of the Company from INR 500 crore to INR 2,000 crore.
With a total experience of 21 years, Mr. Nihalani was in the field of banking, distress assets management, restructuring, turnaround of retail portfolio / SME and large corporate, managing institutional relationship, asset acquisition & evaluation, investments & fund raising. He started his career with Aditya Birla Group and Joined ICICI Bank and worked on Asset Resolution and later joined one of the largest PRA of ARCIL in NPA resolution.
Mr. Nihalani is Commerce Graduate and earned a Master degree in Finance.
Nitin Jain has 22+ years of work experience in areas of Corporate Lending & Banking, Investment Banking and Restructuring spanning organizations like Standard Chartered Bank, Bank of America and ICRA Limited. Currently, he is working as a Senior Partner with AAA Insolvency Professionals LLP. As a Restructuring Expert, he has worked on/ currently working on resolutions for distressed assets with creditor claims of over Rs. 11,000 cr
His educational qualifications include an MBA from Emory University, Atlanta, USA, a Post Graduate Diploma in Business Administration from NMIMS, Mumbai. He is also an insolvency professional registered with IBBI.
Work experience of 27 years as an industrialist, entrepreneur in the field of Iron and Steel. During all these years, he has been actively involved in establishment of businesses such as Power Projects – Thermal, Hydro & Solar and Pharmaceutical, Engineering, Ship-breaking, Real Estate and so on. He has vast experience while having combined knowledge of the domestic conditions as well as global. During his visits world-over for different sectors of industries that he was involved in, his hand on experience has given him a global outlook on most of the industrial sectors. Thus creating a Vision, Knowledge-base and Understanding of all aspects, which are required for running a successful industry / organization in specific sectors and otherwise too.
He is Chairman of ASSOCHAM National Council for ARC ‘s & Vice -Chairman of ARC Association.
Shreeram Sethuraman is the head of Financial Institutions Coverage business for BNP Paribas India. Shreeram is responsible for the overall performance of Financial Institutions Coverage business in India and managing relationships with the leading banks, NBFCs, insurance companies and financial institutions of the country.
Shreeram Sethuraman is a seasoned banker with over two decades of banking experience. He joined BNP Paribas in 2018 and has spearheaded several strategic capital market deals and marquee deals for the bank besides building strong client relationships in the banking and financial services sector.
Shreeram holds a Masters Degree in Management from Mumbai University and completed his Bachelors Degree in Commerce from Sydenham College.
Prior to joining BNP Paribas in 2018, he spent 15 years at Citibank across a variety of corporate coverage roles before becoming the “ Head of Banks” for the Financial Institutions Business where he oversaw all Indian Public and Private Bank Relationships. His previous work experience includes managing retail loan portfolios at HSBC and ICICI Bank.
Dr. Fareed Ahmed, Former Executive Director from Punjab & Sind Bank and superannuated in July 2020 after rendering a service of more than 37 years of service in two Public Sector Banks. Prior to joining Punjab & Sind Bank, he was with Corporation Bank and his last position was Circle General Manager, Ahmedabad.
He has to his credit a versatile experience of working in the entire gamut of banking, both at operational and administrative levels. He held various senior leadership positions and established a track record of success in all the roles and won Corporate Awards many a time.
He was awarded PhD for his thesis “Analysis and Modeling of Management of Asset quality of Public and Private Banks in India”. He suggested ‘bad bank’ concept and need for establishment of Development financial institution in his thesis in the year 2017. He has multiple publications related to NPA and other banking aspects. He is post Graduate in Agricultural Economics and CAIIB. Other academic and professional qualifications include PG diploma in Cooperation & Rural Studies, Diploma in Company Law and certifications in Trade finance, SME finance, Corporate Banking and Cyber Security.
Participated in various Seminars/Conclaves as a panelist and also conducted sessions on Banking, Leadership and Team Performance and related aspects at Banks’ Staff Training colleges and other Management Institutes.
He attended various trainings/workshops/seminars on Banking, Leadership and Human Resources Development conducted by organizations of repute in India and abroad.
Conferred with several awards and distinctions¬ –¬¬¬¬¬¬--“Best HR Leader in PSUs” by Asia Pacific Congress, 2017; “Transformative Leader Award” in National APY Conference 2017 by PFRDA; “Pride of Delhi Award for Excellence in HR” by World HRD Congress, 2017 and “100 Top Most influential BFSI Leaders” in World BFSI Congress & Awards, 2018 by World CSR Day and World Sustainability Congress.
Ashwyn Misra is a Partner at Trilegal, and is a part of the corporate practice group. He primarily focusses on entry strategies, mergers and acquisitions, joint ventures, corporate restructuring, private equity and fund formations.
Ashwyn has a wide experience in transactions in various sectors in India and advises clients on all aspects, including structuring advice from an Indian legal and regulatory perspective impacting entry and exit strategies, due diligence, documentation and negotiations, partnerships, inbound and outbound investments, both strategic cross-border as well as financial, mergers and joint ventures.
Ashwyn has advised multinational corporates like Macquarie Group, Publicis Groupe, Engie, JP Morgan, Sumitomo Metal Industries, Standard Chartered Bank, Bando Chemical Industries Ltd, Credit Suisse, Bank of America, Jardine Lloyd Thompson Group, Assa Abloy Group, Citibank, Goldman Sachs., M3 Inc., Groupe PSA, Daido Steel, Stripe Inc., Asahi Tec Corporation, Vesuvius, Tadano Ltd., Olympus Capital Asia Credit, Tree Line Investment Management and Hitachi.
Some of the domestic companies he has advised include Godrej Industries, Reliance Energy, National Investment and Infrastructure Fund, JSW Steel, Crompton Greaves, Rare Enterprises, Reliance Capital, Shriram Group, Raheja Group, Future Group, Faering Capital, Emaar MGF, Wadhwa Group, Paysense, Alchemy Capital Management, PhillipCapital, Artha Property (part of Bennett & Coleman Group) and Sun Area Property Partners.
Ashwyn is an alumnus of Government Law College, Mumbai. He is a member of the Bar Council of Maharashtra and Goa, India.
Dinesh Arora has done Electronics and Communication engineering from Delhi College of Engineering and then did his Masters from IIM Calcutta. He then joined PwC and has worked for over 25 years with the firm and is currently the Deals Platform Leader. He specializes in Mergers and Acquisition, Fund Raising and Stressed Assets.
Anuj is an investment management and banking professional with over two decades of experience of investing in / resolving distressed credits and private equity investments. Before joining Pepper India to lead investments in distressed assets, he led investments and restructurings at Kotak Mahindra Bank. At ING Vysya Bank, he was responsible for managing the problem loans portfolio of the bank across retail, SME, emerging corporate and large corporate segments. Anuj managed private equity funds at Axis Private Equity and Sabre Capital and led Merrill Lynch’s proprietary investments in distressed assets in India. In the early years of his career, he was an investment banking professional, primarily with Deutsche, Singapore and Merrill, India. Anuj earned his MBA from the Indian Institute of Management, Bangalore and qualified as a Chartered Accountant before that.
Anshuman Panwar is the Co-Founder of Creditas Solutions. An alumnus of Indian Institute of Technology (IIT), Delhi and Indian Institute of Management (IIM), Ahmedabad, Anshuman is a financial service expert with experience in strategy and operations, spanning India, the UK, and the UAE. With Creditas Solutions, Anshuman envisions disrupting the status quo in lending and arming the current Indian BFSI segment with the right technology and optimized processes.
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