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Friday, June 09, 2000
There could be some reprieve in the near future for public sector banks and institutions rid with huge non-performing assets (NPAs) with some innovative New Economy initiatives. auctionindia.com is taking one such initiative.
The business-to-business (B2B) portal, specialising in auctions and sale of industrial machinery and plants, is in talks with a couple of term-lending institutions and state run banks for helping them auction assets under their control.
Quoting conservative market estimates, Mani P Sam, executive Vice President, auctionindia.com, said that bank NPAs as on date stood at Rs.35,000 crore. He, however, said that not many banks had complete control over the physical assets of their borrowers.
Several B2B portals dedicated to the industrial machinery sector have already launched their services in India, prominent among them being, industrialproductsfinder.com, BPL-supported indiamarkets.com, trade2gain.com, auctionindia.com and SIFY's seekandsource.com.
A top official of a leading Chennai based public sector bank said, "Though it is difficult to give an exact figure of physical assets backed NPAs, they are significant in value terms". He was of the opinion that the foremost conditions for listing of such assets would be that banks and institutions have a court order for sale.
"Unless there is a court order for sale, no bank or institution can take any action whatsoever," another official pointed out. Considering the time taken by the courts to pass orders on liquidation of a company or sale of its assets, such New Economy initiatives will take a while before they can offer any immediate solutions, he said.
However, a couple of banks were open to such ideas and would like to exploit any possible way of recovering their investments. One of the main marketing initiatives of auctionindia.com has been to facilitate debt-recovery schemes of banks. It enables lending institutions recover outstanding debts through sale of pledged assets.
According to Sam, over Rs.3,500 crore of machinery was redundant. Quoting market estimates, he said such machinery could also be termed as surplus in nature. "It is quite likely that at least a part of such machinery contributed to the huge NPAs of the local banking sector", he said. |
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