He said India is well poised to overtake China on the global stage in a “Cinderella” moment with the banking industry providing scope for lending to indebted corporates.
“Indian Banks are Losing Big Time to International Banks,” Kotak Told. “As a banker, with sufficient margin, I would have been very comfortable lending against the security of Ambuja Cements And acc Shares,” he said, referring to Adani’s purchase of companies from Holcim. “But in this case, foreign banks have lent money. This had to be an offshore transaction as none of the bidders in India could obtain funds from Indian banks.”
reserve Bank of India ,reserve Bank of India) regulations prohibit Indian banks from lending to companies for acquisitions. The Indian central bank always viewed lending against shares as a risky activity as a sudden drop in stock prices could leave banks with worthless paper. They can only lend up to Rs 20 lakh, a rule established after the so-called Harshad Mehta scam of 1992. bankruptcy In 2018 – a setback to Infrastructure Leasing and Financial Services – said the insolvency code is fine in principle. But signs of modest recovery from bankruptcy such as conglomerates and non-banking finance companies (NBFCs) Reliance Capital And Srei calls for a review in addition to a public interest board for major lapses.
“I am not saying that we need to do away with the IBC (Insolvency and Bankruptcy Code) option,” Kotak said. “There has to be a policy thinking on this. We have to find out that for big national assets, we should think of the public interest route. The objective of the public interest board is to optimize value for stakeholders, which we have demonstrated in IL&FS. and IBC cannot be the only route. This needs to be relooked for NBFC proposals as well.”
He said that India’s investment cycle has to return and the entrepreneurial spirit has to flourish. The hype of an Initial Public Offering (IPO) and the high valuation in the secondary market cannot be taken lightly as the seriousness cannot be challenged.
India with its economic foundation is a strategic play for global investors. But in the short term it can turn into a loser as the weak valuations of Chinese stocks make them a short term option.
“One positive thing is that on a strategic basis, people are concerned about China in the long term,” Kotak said. “On a strategic basis, India should get a higher percentage allocation. But on a tactical basis, a trader can say I will do a quick hit and run in China. Tactically, traders can take a short-term approach, which is different Maybe. And I think it’s a game you need to watch closely every one to three months before taking a one-year view at this stage.