Sick units bemoan handover of NPAs to asset reconstruction firms

Manufacturers of boilers and boiler components in Tiruchi region, who are in a rough patch facing the predicament of takeover of their possessions by banks due to their inability to service debts, have questioned the rationale behind the policy of Reserve Bank of India to entrust the NPAs (Non-Performing Assets) with asset reconstruction companies.

Functionaries of Tamil Nadu Boilers Association (TNBA) point out that the actions of banks such as taking physical possession of assets and conducting auction would not yield the desired results as there will be no buyers.

The takeover by banks would lead to machineries getting rusted, reducing them to scrap. In the present scenario, the banks would be able to realise not more than 20% to 25% of the value of the auctioned machineries.

The drastic fall in the turnover of BHEL coupled with economic measures such as demonetisation and implementation of GST reflected in the decline of the SME units over the years.

The takeover of assets due to repayment failure would only result in social unrest arising out of unemployment, and drastic fall in asset value.

Instead, the SME units must be permitted to retain the machineries and offered a revival programme, TNBA president B. Pattabhiraman and secretary V. Ramakrishnan said. In the context of the market looking up and orders improving from thermal power sector, the banks should consider stopping all legal proceedings against the MSME units under SARFAESI Act, they stressed.

The TNBA is hopeful of bringing about a turnaround in the wake of BHEL identifying around 3.65 lakh metric tonnes as outsourcing orders agaist 1.10 lakh tonnes in the previous years. Also the SMEs in Tiruchi have started receiving orders from the Railways. Besides, the industries in Tiruchi were looking forward to making an entry into production of defence equipment components in a big way.

In the light of these factors, the Central and State governments and the Reserve Bank of India must arrive at a viable revival policy in the interests of the country's development, TNBA treasurer Rajappa Rajkumar emphasised.

Source